SINGAPORE: Pakistan State Oil has bought up to 1.08 million tonnes of utility fuel oil, for January to March delivery, at higher price levels than its previous deal, traders said on Monday.
It bought 10 high-sulphur cargoes (HSFO) of 65,000 tonnes each, including five 125-centistoke (cst) parcels and another five 180-cst lots, as well as another four low-sulphur cargoes (LSFO) of less than 1 percent sulphur content.
The higher-grade 125-cst parcels were purchased at premiums of above $30.00 a tonne to Middle East spot quotes on a cost-and-freight (C&F) Karachi basis, up from $26.00-$29.00 in its previous tender, while the 180-cst lots were transacted at premiums of around $25.00.
Three of the LSFO parcels, of 120-cst, were bought at premiums of $90.00-$120.00 a tonne, while the remaining 170-cst parcel was transacted at around $75.00, traders said.
All the cargoes were purchased from Middle East-based Bakri Trading, which accounted for six of the HSFO parcels, and Western traders Vitol, Trafigura and Glencore, which sold both grades.
Traders said the higher prices were due to tighter supplies in the Middle East, and the reduced presence of one of its major players, UAE-based FAL Oil, from the market.
"FAL's absence has left quite a big void, which the European players, who have a presence here, are trying to fill. This PSO tender is a clear sign of that -- almost all previous PSO tenders were dominated by FAL and Bakri," a Middle East-based Western trader said.
"Also, the market here has been tight on cutters, as it has always been, and that's pushing the prices of the low-viscosity cargoes up."
PSO last bought 780,000 tonnes of 125-cst, for January-February delivery, at premiums of $26.00-$29.00 a tonne to Middle East spot quotes, C&F.
Traders said the Middle East market, which meets all of Pakistan's fuel oil requirements of about 500,000-600,000 tonnes a month, has been tight on low-viscosity supplies.
Cutters in East Asia are also running tight, due to heavy inflows of Western arbitrage cargoes for February, with 3.7 million tonnes of mostly high-viscosity cargoes booked.
Reflecting this, the product's viscosity spread has widened unabatedly over the past week, with the front-month February contract valued at $10.50 a tonne in early Monday trade by 0430 GMT, up 13 cents from its previous close.
Comments
Comments are closed for this article.