SINGAPORE: Differentials in the Asia-Pacific crude market continued to slide on Thursday amid ample supply and weak demand, but may find some support from less attractive economics for bringing West African cargoes to the region, traders said.
A large inflow of arbitrage cargoes, particularly from West Africa, has added to a glut of crude in Asia. But with freight rates on the West Africa-to-China route rising, the trade now looks less economical.
"We're not so sure the October-programme will go as fast as last month," a Singapore-based trader said, referring to Angolan grades.
"Maybe buyers are looking at some of the regional grades instead," he said.
Brent's narrowing premium to Dubai crude also lent support to Brent-linked regional grades. Brent-Dubai Exchange of Futures for Swaps (EFS) narrowed 8 cents to $1.05 a barrel on Thursday, near its lowest in more than four years.
Vietnam's PV Oil sold two 300,000-barrel cargoes of Ruby crude in a tender at around $1 a barrel above Dated Brent, down more than $1 from last month, traders said.
Petro-Diamond Singapore bought one Ruby cargo for loading Oct. 6-12, while the buyer of the second cargo loading Oct. 20-26 was unclear.
Premiums also fell for Vietnam's Chim Sao crude. In a tender, PV Oil sold one 300,000-barrel cargo loading Oct. 14-18 to BP at around $4 a barrel above Dated Brent and a second cargo loading Oct. 25-29 to Vitol at a premium of around $3.80, traders said.
None of the deals could be independently verified.
PV Oil closed a tender on Thursday to sell 200,000 barrels of Thang Long crude loading Oct. 10-19. The tender is valid until Friday.
Differentials for Papua New Guinea's Kutubu grade also dropped, with Oil Search selling an end-October cargo to an Asian refiner at a discount of below $1 a barrel against Dated Brent, traders said.
An earlier cargo was heard to be sold by Oil Search at a small premium. It was unclear what caused the large drop, but traders said the crude was still untested by some refiners due to recent quality changes, making some buyers hesitant to pay a higher price.
An industry source said earlier the API of the new Kutubu blend would rise to around 49 from 44-45.
Differentials for Australia's Northwest Shelf (NWS) condensate also fell slightly due to weak naphtha cracks, but were held up by limited regional supply in October. Chevron sold a NWS cargo loading Oct. 12-16 to Samsung Total at $2.70-$2.90 a barrel below Dated Brent, a trader said.
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