Crude mixed reaction in Vietnam, Russia

SINGAPORE: Sentiment for sweet crude was mixed in Asia on Thursday after Vietnam likely sold term Rang Dong at a higher premium partly on firm Japan demand while Russian Vityaz fell slightly on weak naphtha outlook.

Vietnam's PV Oil has likely sold light sweet Rang Dong crude for October 2011 to March 2012 loading to ConocoPhillips at a premium of around $5 a barrel to the Minas formula, up from $3.88 a barrel in the previous term tender, traders said. The tender has not been formally awarded, they said.

Firm demand for direct-burning crude as well as low sulphur grades to produce fuel oil for power plants in Japan have boosted demand for Vietnamese crude.

"Nothing is cheap now. Overall, cracks or margins are better," a trader said.

Potential term buyers were asked to bid for at least 6,700 barrels per day or a little over 200,000 barrels a month per firm.

- Russia's Sakhalin Energy sold 730,000 barrels of light sweet Vityaz crude for October loading via a tender at a lower premium than an earlier deal this month on a weaker outlook for naphtha.

Sakhalin Energy sold the naphtha-rich crude cargo for Oct. 23-30 loading at a premium of $5.15 a barrel to Dubai quotes, a trader said. A Chinese buyer likely purchased the cargo, a second trader said, although this could not be confirmed.

Formosa Petrochemicals, the largest naphtha buyer in Asia, shut it is largest cracker for maintenance while another unit has already been idle for more than two months following a fire.

The premium was similar to levels fetched by September loading cargoes although slightly lower than an earlier deal this month. Before the tender, Sakhalin Energy had sold an October-loading cargo to a South Korean refiner at a premium of $5.30-$5.50 a barrel to Dubai quotes.

South Sudan sold 600,000 barrels of Nile Blend crude for September loading to Chinaoil at $4.50 a barrel below ICP Minas, traders said, although this could not be confirmed.

Vitol has sold a September Ruby cargo to a Japanese oil refiner at $4.40-$4.60 a barrel above the Minas formula. This was higher than the $4 a barrel premium Vitol paid for the cargo in a PV Oil tender.

MARKET NEWS

Taiwan's Formosa Petrochemical Corp is ready to start-up its 540,000 barrels per day (bpd) refinery in stages after it was completely shut following a fire at a secondary unit end July, its spokesman said on Thursday.

South Korea's S-Oil has shut down a 240,000-barrel-per-day (bpd) crude distillation unit (CDU) from Aug. 7 through the end of this month for planned maintenance that was delayed from earlier this year, traders said.

Russia is likely to introduce planned cuts in the oil export duty regime on Oct 1, a source close to the government body responsible for the tariff told Reuters, a move it hopes will boost investment in local fields.

North Sea oil output is scheduled to rise by 19 percent in September due to a reduced impact on supplies from maintenance at oil installations, expanding production from the home of the Brent oil benchmark.

Barclays Capital said it expects oil prices to be on a rising trend from $100-130 a barrel over the next 12 months as the current risk-off trade subsides, even with potentially slower economic recovery in OECD countries.

Two Thai companies are to design a 241,000-barrel-per-day (bpd) refinery in Vietnam's central region, the official Vietnam News Aency reported.

REFINERY MARGINS

Complex processing margins for Dubai in Singapore were around $9.97 per barrel, down from an average of the last five days of $10.70, Reuters data show. Over the last year, the average margin has been around $6.80 per barrel.

CRACK SPREADS

Fuel oil's September crack widened $1.17 to a discount of $5.95 a barrel to Dubai crude.

Gas oil's September crack fell 2 cents to a premium of $18.74 a barrel to Dubai crude.

The naphtha CFR Japan front-month crack narrowed 21 cents to a discount of $5.41 a barrel to Brent.

OUTRIGHT PRICES

September ICE Brent was at $107.36 a barrel at 0830 GMT, up $1.98 from Wednesday.

Copyright Reuters, 2011