SINGAPORE: Inflows of arbitrage cargoes weighed on the Asia-Pacific crude market, while demand outlook from refineries in the region remained bleak, traders said on Thursday.
Shipments to Asia from the Atlantic Basin have increased since Brent's premium to Dubai swaps began narrowing in July, adding to a glut of crude in the region.
Brent-Dubai Exchange of Futures for Swaps (EFS) narrowed 10 cents to $1.10 a barrel, as Brent crude hit a 17-month low below $98 a barrel..
PV Oil, the trading arm of PetroVietnam, issued a tender to buy 700,000 barrels or 1 million barrels of sweet crude from West Africa, Libya and Azerbaijan, as the state-owned company seeks to test new grades at its Dung Quat refinery.
The company is seeking Nigerian grades Bonny Light, Qua Iboe, Escravos, Forcados, Erha, Brass River and Yoho, Congolese N'Kossa, Libyan Bu Attifel, or Azeri Light in the tender that closes Sept. 15 with bids valid until Sept. 17.
PetroVietnam hasn't previously imported crude from West Africa or Libya, according to Reuters shipping data and traders.
Libyan exports put further pressure on Asia-Pacific grades, after the OPEC member this week increased production to 810,000 barrels per day (bpd), up from as low as 150,000 bpd earlier this year. Libyan crude is similar in quality to some Asia-Pacific grades.
Libya's oil output could is expected to rise to one million barrels a day in October, Prime Minister Abdullah al-Thinni said.
A hefty backlog of Nigerian crude could add pressure on Asia-Pacific grades. Around half the Nigerian cargoes due to be exported in October were still available for sale around a week before November cargoes start to appear.
Sales of Angolan grades to Asia were going more swiftly, with only six cargoes still available out of 55 initially offered for sale.
However, China's appetite for Angolan grades had eased this month, after Chinese buyers last month bought a near record of around 30 cargoes, a trader said.
Traders said increased arbitrage inflows were unlikely to be met by higher demand, even as northern hemisphere winter approaches.
"We're still not sure that demand will pick up much going into the winter," a Singapore-based trader said.
TENDERS
PV Oil offered 200,000-500,000 barrels of Su Tu Den crude for loading in November in a tender that closes Sept. 16 with bids valid until the following day.
PetroVietnam plans to double production of Su Tu Den to around 80,000 barrels per day (bpd) in the fourth quarter, industry sources said earlier this year.
MARKET NEWS
Top oil exporter Saudi Arabia told OPEC it reduced its oil output in August by 400,000 bpd, a cutback coinciding with a drop in oil prices towards the kingdom's preferred level of $100 a barrel.
Taiwan's diesel term buyers are opting to defer the lifting of cargoes to later dates as demand remains muted in Asia while supply has increased on new capacity and refineries returning from maintenance, traders said on Thursday.
State-run CNOOC Ltd, China's top offshore oil producer, has issued a tender inviting foreign firms to bid for oil and gas blocks in offshore areas, including the South and East China Sea, the company said.
Comments
Comments are closed for this article.