SINGAPORE: Differentials for benchmark Murban crude from Abu Dhabi slipped further on Thursday as an overhang of supply continued to pressure barrels from the Middle East.
Murban was valued at a disc7ount of about 25-30 cents, down about 5 to 10 cents from levels seen in the previous session, traders said.
Buyers were reluctant to deal at current prices and were looking for steeper discounts of around 50 cents.
"Sellers are going to have to come off on their offers, the market is nowhere close to paying what they are asking."
The strength of fuel oil margins have done little to give support to the Middle East barrels so far, but some traders anticipate this could be a supportive factor soon.
"Too early to say, but if you get fuel oil strengthening any further we should see some kind of reflection of that on the differentials," a trader said.
Asia fuel oil margins climbed in early trade on Wednesday to their highest in more than four months, supported by weaker crude prices and thinner western arbitrage flows.
TRADES
- A total of 21 partials were traded in over-the-counter (OTC) trade at a transacted price of $95.60 with Shell seen on the buy side for most of those deals.
Exxon Mobil purchased a cargo of August loading Al-Shaheen from Maersk at a premium to Dubai of $1.20-$130, while Total sold a cargo of Qatar Marine to Hyundai at a small discount to its official selling price.
MARKET NEWS
- South Korea's third largest refiner, S-Oil, reduced the operating rate at its refinery to 93 percent in June after margins weakened, industry sources said.
- Oil prices are more likely to fall than rise at this moment, the chief executive of Italian oil and gas group Eni said.
- Japan's lower house is set to pass a bill on Friday to provide government guarantees on insurance for Iranian crude cargoes, making it the first of Iran's big Asian buyers to find a way to keep the oil flowing in the face of tough new EU sanctions.
- South Korea has imposed limits on its exports to Iran - mainly steel, cars and electronics - to reduce its risk of payment defaults as western sanctions disrupt Iranian oil exports, the Korea International Trade Association (KITA) said.
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