SINGAPORE: DME Oman's discount to Dubai widened slightly in the Middle East crude market on Wednesday as deep price cuts from competing Gulf producers weighed on the grade.
Traders expect the price cut for Saudi's Arab Medium to support the differential for similar grade Banoco Arab Medium and flip it into positive territory. Last month, October-loading Banoco AM had traded close to a discount of $1 to OSP.
But downward pressure remained for Abu Dhabi and Qatari grades as price reductions from the two producers were much smaller than those by Saudi Arabia and Iraq.
Still, Qatar Marine, Abu Dhabi's Murban and Das are unlikely to post discounts as wide as nearly $1 seen last month.
Improving refining margins and peak winter demand may support the market although traders remained cautious about the strength of recovery as excess supply could be released from storages while Asia will continue to receive large volumes of arbitrage supply from the Atlantic Basin.
"November physicals are still going to be weak," a trader said.
Traders are still awaiting new monthly OSPs from Iran and Kuwait.
TENDERS
Rosneft issued a tender offering 700,000 barrels of Sokol for loading on Nov. 13-22. The tender closes on Sept. 11 with bids valid until Sept. 15.
DME OMAN
DME Oman for November settled at $97.47, down 88 cents, at 0830 GMT. This puts DME Oman at 85 cents a barrel below Dubai swaps against a 80 cent discount in the previous session.
REFINERY
Kuwait has shut a 120,000 barrels per day crude unit at the Mina al-Ahmadi refinery for planned maintenance, the head of state-run oil refiner Kuwait National Petroleum Company (KNPC) said.
Kuwait's plans to boost refining capacity by over 50 percent are still on track, a senior oil official said, despite having to extend tenders to build a 615,000-barrel-per-day refinery that has faced delays and political opposition in the past.
MARKET NEWS
Britain's North Sea Buzzard oilfield was shut down again on Monday night, trade sources said on Tuesday, as it struggles to return from maintenance.
South Africa wants to resume oil imports from Iran, once its biggest supplier, and hopes to resolve "sanction issues" that have blocked purchases within the next three months, its deputy foreign minister said.
Iraq's new oil minister is a veteran politician who will need to deploy all his experience to resolve disputes over Kurdish oil production and allay foreign investor fears about Islamist militia control in northern oil fields.
Royal Dutch Shell is betting on chemicals, lubricants and retail fuel sales to help it boost the performance of its downstream division where oil refining will remain a drag on earnings in many regions for years to come.
European Union countries will discuss on Wednesday whether to implement new sanctions against Russia over its involvement in the Ukraine war, the European Commission said on Tuesday, as Kiev urged the 28-nation bloc to move without delay.
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