Middle East crude benchmarks started June on a strong note on Friday with cash Dubai and DME Oman both at premiums higher than $1.20 a barrel to Dubai swaps.
Formosa Petrochemical has bought 2 million barrels of Basra Light crude in a tender, at a lower premium than the previous month, two trade sources said.
The cargo for delivery from July 20 to August 20 was purchased at a premium equivalent to about 30 cents a barrel above the grade's official selling price (OSP) on a free-on-board basis, one of the sources said.
In its previous tender, Formosa bought June-loading Basra Light at a premium of about 50 cents a barrel to the OSP
Saudi Arabia may raise the official selling prices (OSP) for most of the crude grades it sells to Asia in July for a second month, possibly raising flagship Arab Light to its highest since February 2014, trade sources said.
Dubai's strength may mean Arab Light's OSP for July could rise by as much as 40 cents a barrel to as much as $2.30 a barrel above the average Oman and Dubai quotes published by Platts, from $1.90 in June, according to a Reuters survey of five refiners and traders.
Still, four of the five respondents are hopeful the July price hike will be smaller than 40 cents because of lower jet fuel margins and as a big price hike would make Arab Light uncompetitive against Middle East and Russian grades of similar quality.
In contrast, higher fuel oil margins last month and falling Venezuelan production are supporting higher OSPs for heavier grades.
The July OSP for Arab Heavy crude could rise by between 40 cents to 50 cents a barrel, narrowing the price spread between light and heavy grades, the respondents said.
For Abu Dhabi grades, traders expect Murban's OSP premium to Dubai to rise by up to 25 cents while that for Das could go up by 20 cents a barrel. Upper Zakum could rise by 30 cents.
Qatar may increase Land and Marine crudes' OSP premiums to Dubai by 10 cents and 35 cents, respectively, they said.
Tenergy may have sold two ESPO cargoes in Thursday's tender at premiums below $3 a barrel to Dubai quotes, traders said, down from earlier deals at $3.20-$3.30. This would be the lowest premium for ESPO in seven months, according to Reuters data.
Japanese refiner Cosmo Oil has bought 1 million barrels of US West Texas Intermediate (WTI) Midland crude to be loaded in June, a source with knowledge of the matter said.
"US crude is becoming more and more competitive because WTI-Dubai has widened," he said.
Prior to this, Cosmo Oil lifted 500,000 barrels of WTI Midland crude in April, co-loading the US oil with Mexican crude onboard a supertanker, according to the source and shipping data on Eikon.
A company spokesman said Cosmo Oil buys US crude from time to time, but he cannot provide details on the purchases. Cash Dubai's premium to swaps was at $1.21 a barrel after Total bought one August partial from Unipec in the sole trade on Friday.
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