SINGAPORE: Robust refinery demand continued to support the Asia-Pacific crude market while high freight rates curbed supply of crude from other regions.
Regional light grades have benefited from strong naphtha cracks this month with complex refining margins in the Singapore hub having hovered above $9 a barrel in the past week, up from an average of below $7 a barrel last month.
The spike in refining margins was in part due to higher demand for oil products such as naphtha and gasoline as oil prices fell this month to three-month lows.
Limited supply and rapidly changing demand had prompted traders to look more at refined product markets for profits rather than crude oil, where a rising glut in supplies has suppressed much of the physical gyrations.
"At least, this time around everyone is happy. Margins are good and producers enjoy high premiums," a crude oil trader said.
Vietnam's PV Oil sold a total of 900,000 barrels of medium sweet Chim Sao crude at $1.5-$2 a barrel above dated Brent, largely in line with the previous month, traders said.
It sold three 300,000-barrel cargoes loading Jan 3-7, Jan 15-19 and Jan 27-31 in the tender to unknown buyers, they said.
ConocoPhillips this week began marketing a January cargo of Bayu Undan condensate, traders said, although details remained unclear.
Spot differentials for condensate have spiked this month due to tighter supply from Qatar and strong profit margins for naphtha, a petrochemical feedstock, with Australia's Northwest Shelf (NWS) condensate trading at a premium to dated Brent for the first time in nearly five years.
In a deal done last week, Chevron sold a NWS cargo loading Jan 30-Feb 3 to an unknown buyer at around $2.30 a barrel above dated Brent, traders said.
India's crude oil imports from the Asia-Pacific region, mainly Malaysia and Australia, surged to 187,000 barrels per day (bpd) in October, the highest since April 2014, data showed.
That was more than double the volume imported from Asia-Pacific in September and up some 70 percent from a year ago.
Malaysia in particular has been looking for stable outlets to bolster oil revenues and cushion the impact of falling global crude prices, reducing spot prices to attract buyers and offering grades to refiners further away such as in India.
Brent-Dubai Exchange of Futures for Swaps (EFS), or Brent's premium to Dubai swaps, widened 10 cents to $2.78, the highest since July last year. The February spread was at $2.72 a barrel.
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