SINGAPORE: The Asia-Pacific crude market held steady on Wednesday as trading for October-loading cargoes was slow to begin, although strong competition from sellers in West Africa and Latin America could weigh on demand for regional grades.
Brent's premium to Dubai crude fell below $1 a barrel for the first time in over four years, as a glut of oil in the Atlantic Basin and in Asia weighed on the European benchmark.
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.
The narrowing gap makes Asia-Pacific grades more attractive relative to Middle Eastern grades, but also pulls more cargoes of West African and Latin American crudes to Asia, as sellers struggle to find a home for their cargoes in a well-supplied global market.
"Competition is fierce," a trader said.
India's MRPL, which usually buys its crude from West African producers, bought its second Argentinian crude cargo this year, trade sources with direct knowledge of the matter said.
The company bought 1 million barrels of medium sweet Escalante crude from Glencore at a discount of about $2.70 a barrel to dated Brent on a free-on-board basis for lifting in the second half of September through a tender, they said.
Adding to the glut of sweet crude, an oil tanker carrying 670,000 barrels of Sirtica crude has left Libya's Ras Lanuf oil terminal. The shipment is the first since the port was reopened following a year of blockades by armed protesters.
Weak refining margins continued to weigh on demand for crude. Complex refining margins in the Singapore hub have averaged $2.75 a barrel in the past week, compared to over $4 last month.
Japan may try to take advantage of oversupply in the region to increase the amount of light crude in its national reserves.
In a move to decrease stocks of heavier crude to reflect the country's changing petroleum import preferences, 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.
Vietnamese exports in October is expected to be in line with the previous month, although production of Su Tu Den may be slightly higher, a trading source familiar with the country's production plans said.
State-owned PetroVietnam plans to double production of its Su Tu Den crude from current levels to around 80,000 barrels per day (bpd) in the fourth quarter, although the exact timing of the ramp up remained unclear, the person said.
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