SINGAPORE: Middle East crude slid further on Thursday as fuel oil cracks tumbled, shrugging off news of an outage at the Upper Zakum field in the United Arab Emirates.
Offers for Oman crude were at a premium smaller than $1 a barrel to Dubai quotes and as low as 80 cents, traders said, although this could not be confirmed.
That compares with trades earlier this week at a $1 premium and as high as $1.45 at the end of last week. Asian fuel oil cracks declined to their weakest in almost 30 months on Thursday.
* UPPER ZAKUM
- Output of Upper Zakum crude from the Abu Dhabi National Oil Company (ADNOC) in the United Arab Emirates will fall in late April and May by as much as 40 percent because of a partial field outage, traders said on Thursday.
- Abu Dhabi's Zakum Development Company (ZADCO), operator of the field on behalf of ADNOC, confirmed the outage, but said it was for normal maintenance and would not affect monthly average production.
- Two traders said production during the outage would fall to between 300,000 and 320,0000 bpd, while three other traders said state-owned ADNOC planned to resume full production of about 500,000 barrels per day (bpd) by June.
- "I don't know if it was planned or not, but it surprised people," a trader said, adding that was reflected by Dubai spreads, or the premium of prompt supplies over later-dated cargoes.
- The premium of May Dubai crude swaps over June increased by 4 cents over the past two days to 47 cents a barrel, Reuters data shows. Upper Zakum crude can be delivered instead of Dubai for pricing purposes according to the methodology of pricing agency Platts.
- Some traders said the outage could raise demand for spot Middle East crude loading in May.
* TENDERS
- Surgutneftegaz, Russia's fourth-largest oil producer, sold via tender four cargoes of ESPO crude for loading in June at lower premiums than the previous month after gas oil cracks weakened.
- The 100,000 tonne cargoes were sold at premiums of between $5 and $6 a barrel to Dubai quotes, they said. Glencore bought two cargoes, while BP and Vitol purchased one each, one source said, although this could not be confirmed. The cargoes will load at the Russian Far East port of Kozmino on June 9-12, 14-17, 23-26 and 27-30.
* EAST-WEST
- The front-month Brent/Dubai Exchange of Futures for Swaps (EFS), an indicator for the premium of light sweet grades over heavy sour supplies, fell 44 cents to $6.41 a barrel, after reaching $7.86 earlier this month, the widest in more than five years, Reuters data showed.
* DME OMAN
- June Oman traded on the Dubai Mercantile Exchange (DME) tumbled 42 cents to a premium of 10 cents a barrel to Dubai swap quotes at 0830 GMT, using the settlement price for DME futures, the ICE one-minute marker for Singapore and the Brent-Dubai EFS as calculated by Reuters.
* MARKET NEWS
- The United States voiced confidence in Libya's main opposition council on Wednesday as the US Treasury moved to permit oil deals with the group -- a potential financial lifeline for the anti-Gaddafi uprising.
- China has drawn up guidelines for power cut-off orders when electricity supplies trail demand, the National Development and Reform Commission said.
- The Russian government ordered oil companies to halt premium gasoline exports in May to ease a domestic fuel supply crisis, but producers said a complete halt was impossible and only spot volumes could be diverted.
* REFINERY MARGINS
- Complex processing margins for Dubai in Singapore were around $8.69 per barrel, up from an average of the last five days of $8.24, Reuters data show. Over the last year, the average margin has been around $5.50 per barrel.
* CRACK SPREADS
- Fuel oil's May crack widened 89 cents to a discount of $14.34 a barrel to Dubai crude.
- Gas oil's April crack fell 23 cents to a premium of $19.36 a barrel to Dubai crude.
- The naphtha CFR Japan front-month crack rose 36 cents to a discount of $7.43 a barrel to Brent.
* OUTRIGHT PRICES
- June ICE Brent was at $125.76 a barrel at 0830 GMT, up $1.62 from Wednesday.
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