Singapore: Saudi Aramco has sold two fuel oil cargoes, totalling up to 145,000 tonnes, for April loading, at lower price levels despite expectations that the Middle East market will stay tight in the medium term till May at least, traders said yesterday.
The first 90,000-tonne cargo, an A961 parcel of 180-centistoke (cst) for April 10-12 loading from its 550,000 barrels per day Ras Tanura refinery, was sold to FAL Oil at a discount of $4-$5 (Dh14.69-Dh18.36) a tonne to Singapore spot quotes on a free-on-board (FOB) basis, down from $3-$4 premium previously.
The second lot, 53,000-55,000 tonnes of its straight-run long-residue 380-cst for April 6-8 lifting from its joint-venture Sasref refinery in Jubail, was sold to Shell at a discount of $2-$3 a tonne to spot quotes, FOB.
"Competition for the A961 cargo was mainly between players in the Middle East markets and there was scant interests from Singapore players," a Singapore-based Western trader said.
"The Middle East market is still tight — as shown by the Kuwaiti barrels that were done at higher prices, but I believe the demand is for cargoes that are close to ready-made bunkers grade 380-cst."
Kuwait Petroleum Corp (KPC) sold two 80,000-tonne cargoes to Middle East trader Bakri at significantly higher price levels.
The first parcel of its cracked 380-cst grade, for lifting on April 13-14 from Shuaiba, was sold at a premium of around $9 a tonne to Middle East spot quotes on a free-on-board (FOB) basis, up from $5-$6 premium previously.
The second lot, of its bunker grade, for April 10-11 loading on a Ship-To-Ship (STS) transfer basis off the tanker Al Samidoon, was traded at a premium of around $15 a tonne to Middle East quotes.
Traders said the A961 parcel is more suited for supply into Pakistan, which buys 500,000-600,000 tonnes a month of 125-180 cst for power generation, rather than for the Fujairah marine fuels market.
Also, traders said the market is looking for supplies a month ahead and that short-term supply tightness has been eased, reflected by the price spread between Fujairah and Singapore bunker prices which has narrowed to $3-$4 a tonne since Monday, down from $10-$12 for the past two weeks.
Supplies in the Middle East are tight due to the 45-day maintenance shutdown of Aramco's joint-venture 400,000-bpd Samref refinery in Yanbu from the end of this month and the looming peak summer demand season in the kingdom from May.
Volumes from Saudi Arabia started falling for March-loading parcels, which totalled 300,000-350,000 tonnes, down from 500,000-550,000 of February lifters.
So far, Saudi Arabia has sold about 200,000 tonnes of April loading fuel oil.
Unlike the Middle East, the East Asian market is over-supplied with high-viscosity cargoes due to heavy Western arbitrage arrivals in March and April at 3.3-3.4 million tonnes and five-year high volumes of 4.2-4.3 million tonnes respectively.