SINGAPORE: March spot premiums for Russian Sokol crude dropped on Tuesday in a sign that demand is expected to ease going into the spring as Asian refiners prepare for maintenance at their plants.
ONGC sold 700,000 barrels of Sokol crude loading March 1-7 in a tender to Vitol at around $4.90 a barrel above Oman/Dubai quotes, which translates roughly to the same price level against Dubai quotes, traders said.
The price was about $1 per barrel lower than the highest level registered for February cargoes when ExxonMobil sold a cargo at $6.10 a barrel above Dubai quotes, Reuters data showed.
Russian Far East grades have been supported this month by strong demand and high freight rates for longer-haul cargoes from the Middle East and West Africa. But differentials for both Sokol and ESPO were expected to come under pressure ahead of the spring refinery maintenance season.
Still, purchases of Russian grades by independent Chinese refiners, that cannot take large shipments from places like West Africa or the Middle East due to their size and logistical constraints, could keep spot premiums supported, traders said.
Beijing has this year granted several independent refiners import licenses and is set to award another four non-major domestic refiners quotas to process a total of 14.47 million tonnes of imported crude a year, the country's state planner said on Tuesday.
Cash Dubai held steady after Unipec sold one February Dubai partial to Chinaoil at $31.90 a barrel, a trader said.
DME OMAN
DME Oman for February settled at $31.99, down 44 cents, at 0830 GMT. This puts DME Oman at $1.68 a barrel below Dubai swaps, against a discount of $1.52 in the previous session.
MARKET NEWS
Saudi Arabia has raised domestic energy prices, including prices for gasoline and other fuels in a move to reduce pressure on the state budget. It has set the price of 95 octane gasoline at 0.90 riyals ($0.24) per litre, up from the current price of 0.60 riyals per litre, according to the state news agency SPA.
Still, Saudi Arabia is better equipped to wait out currently low oil prices than other producers, Saudi Aramco Chairman Khalid al-Falih said, adding that he expected a more stable market "some time in 2016".
China is set to award four non-major domestic refiners quotas to process a total of 14.47 million tonnes of imported crude a year, the country's state planner said on Tuesday.
Iraq, OPEC's second-largest producer, has approached PetroChina and ExxonMobil about investing in a multi-billion-dollar project to boost output from its smaller southern oilfields, a senior Iraqi oil official said.
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