SINGAPORE: The Middle East crude market softened despite continued robust demand from Chinaoil which bought another three physical cargoes on the Platts window on Tuesday.
Gunvor and Shell will each deliver an Upper Zakum to Chinaoil while Unipec sold an Oman to its Chinese counterpart, traders said. Chinaoil has bought 22 cargoes on the trading platform this month, including 14 Upper Zakum cargoes, 7 Omans and one Dubai.
Asian refiners had raised concerns about the recent strength in Dubai which depressed margins amid soft demand for oil products.
"Margins are getting crushed because of this bull play," a trader with a Western firm said.
This could weaken demand for December-loading crude, he said, adding that refiners may also buy less as they have to reduce inventories at the end of the year for accounting purposes.
Yet, sharp price cuts by Middle Eastern producers were likely to support spot differentials for December-loading cargoes, traders said.
Qatar has become the latest Middle East oil producer to cut prices by more than $1 a barrel in an attempt to revive demand for its crude in Asia.
The discount for Qatar Marine's official selling price (OSP) to Dubai widened by $1.49 to $1.52 a barrel, the biggest discount since January 2008, according to Reuters data. The price cut was in line with the large discounts seen for November-loading Qatar Marine cargoes sold last month.
The Gulf Arab state also set its September Qatar Land crude OSP at $96.95, down $6.25 from the previous month. This was equivalent to a 99-cent cut for Qatar Land's premium to Dubai to 48 cents a barrel.
Tasweeq issued its monthly tender offering six al-Shaheen cargoes for loading on Dec. 10-11, 13-14, 16-17, 21-22, 25-26 and 28-29, traders said. The tender will close on Oct. 15 with bids valid until two days later.
DME OMAN
DME Oman for December settled at $88.02, up 20 cents, at 0830 GMT. This puts DME Oman at 55 cents a barrel above Dubai swaps against an 78-cent premium from the previous session.
REFINERY
Taiwan's Formosa Petrochemical Corp will shut a secondary unit at its 540,000 barrels-per-day (bpd) Mailiao refinery for maintenance in November, the company spokesman said.
MARKET NEWS
The world will see much weaker oil demand growth in 2015 than forecast previously, the International Energy Agency said on Tuesday, adding that oil prices may drop further.
Saudi billionaire Prince Alwaleed bin Talal said the world's top oil exporter should start worrying about the recent slide in global oil prices and warned against the negative effect of such a drop on the state revenue.
North Asian refineries are slashing spot prices of most oil products to multi-year lows to get rid of high inventory as they battle weak regional demand and competition from a booming US shale market, industry sources said.
The vast majority of shale oil in the United States is produced at costs far below the current price of crude, the head of the west's energy watchdog said, which means US projects can withstand the market slump squeezing other producers.
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