SINGAPORE: The Middle East crude market weakened on Wednesday with Oman slipping into a wider discount against Dubai as ample supply weighed.
Geopolitical tensions showed little signs of disrupting supply with OPEC's production hitting a five-month high of 30.44 million barrels per day (bpd) in July, according to the International Energy Agency.
Iraq has also scheduled to export about 2.4 million barrels per day (bpd) of Basra Light crude in September, up from 2.2 million bpd in the previous month.
Still, there is doubt that all the September cargoes will load on schedule. The time taken for tankers to dock and load oil at the Basra ports have again stretched to nearly two weeks, a trader said.
Implied oil demand at the world's second largest oil consumer has also disappointed in July with a 6 percent drop, and net fuel export volume has hit the highest so far this year.
All these factors continue to squeeze the price spread between Brent and Dubai, keeping the arbitrage window for oil from Europe, Latin America and Africa flowing to Asia wide open.
Brent-Dubai Exchange of Futures for Swaps (EFS) for September was valued at 95 cents a barrel, down 12 cents from Tuesday's close and the narrowest since mid-June, 2010.
October EFS was at $1.54 a barrel, down 12 cents.
In the US, Asian buyers of ultra light oil are struggling to find small-sized ships willing to undertake the month-long voyage at affordable rates as US-Asia oil trade flows grow.
Japanese trading firm Mitsui & Co loaded the first condensate cargo on July 30. A second cargo, also purchased by the trader, was scheduled to load Aug. 8-10 for a destination in Asia, but it has not been shipped yet, a delay traders and shipping sources attributed to the high cost of Panamax tankers.
*TENDERS
Japan sold about 1.9 million barrels (300,000 kilolitres) of medium sour Mexican crude from the government's Strategic Petroleum Reserves, an official said on Wednesday, as part of a plan to replace the petroleum with lighter grades.
Traders said JX Nippon bought the cargoes with just over 1 million barrels to be loaded or delivered between Sept. 10 and Oct. 20 and nearly 900,000 barrels for loading or delivery between Nov. 10 and Dec. 20. The deal could not be independently verified.
Sri Lankan refiner Ceypetco will close on Wednesday a tender seeking Murban crude.
*DME OMAN
DME Oman for October settled at $101.59, down $1.42, at 0830 GMT. This puts DME Oman at 27 cents a barrel below Dubai swaps against a discount of 36 cents in the previous session.
*MARKET NEWS
Singapore's Universal Terminal, backed by China's state oil giant PetroChina 601857.SS, plans to raise as much as S$1 billion ($800 million) in an initial public offering of units of a business trust, two sources with direct knowledge of the matter told Reuters.
Thailand's PTT Global Chemical Pcl said on Wednesday it is seeking a partner to expand the crude processing capacity of its planned joint petrochemical project with Indonesian state oil and gas firm Pertamina.
US refiners will refrain from buying more Kurdish crude oil until a long-running dispute between Baghdad and Iraqi Kurdistan is settled, while Washington urges both sides to set aside their differences and helps them tackle Sunni militants.
A fire broke out at a PetroChina oilfield in northwest China but the blaze was put out and no casualties were reported, industry officials said on Wednesday.
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