SINGAPORE: The Asia-Pacific crude market continued to weaken on Wednesday as the premium for Malaysia's Labuan crude fell on low demand and large arbitrage inflows into the region.
Still, some traders said the distillate-rich grade fetched a higher-than-expected premium in a market weighed down by poor refining margins.
Malaysia's Petronas sold 300,000 barrels of Labuan crude loading Oct. 13-18 at $5.50-$5.80 a barrel above Dated Brent, traders said.
The premium was down from around $6 a barrel for a September-loading cargo, according to Reuters data. The buyer of the Labuan cargo was unclear, and the deal could not be independently verified.
Regional grades have found some support by Brent's narrowing premium to Dubai swaps, making them more attractive relative to Middle East grades.
Brent-Dubai Exchange of Futures for Swaps (EFS) widened 5 cents on Wednesday to $1.13 a barrel.
Increasing exports of sweet Libyan grades could weigh on the market, with the first crude oil tanker from the Es Sider port loading following a year-long blockade.
TENDERS
Russia's Rosneft awarded a tender to sell two 730,000-barrel cargoes loading Sept. 30-Oct. 5 and Oct. 4-9. The first cargo fetched $1.20-$1.30 a barrel above Dubai quotes, while the latter a premium of $1.70-$1.80 a barrel, traders said.
The buyers were not known, and the deals could not be independently verified.
MARKET NEWS
The capacity of Iraqi Kurdistan's independent oil pipeline will almost double to at least 200,000 barrels per day by the end of this month, helping the semi-autonomous region increase exports and revenue, industry sources and officials said.
OPEC is not worried about a slide in oil prices towards $100 a barrel, delegates from the producer group said, with current levels seen as acceptable for producers while higher seasonal demand in the coming weeks was expected to support the market.
Previously ranked as Asia's top diesel importer, now No.3 Indonesia is expected to take a third less of the fuel this year as demand from mining falters and biodiesel use in transport and industry grows with a mandate implemented in January.
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