Oman crude locked in deep discounts with Asia refiners

Tokyo: Middle East sour benchmark Oman crude was locked in steep discounts with South Korean and Taiwanese refiners planning run cuts and as arbitrage opportunities remained wide open, traders said yesterday.

Chinese trader Unipec recently sold cargoes to two firms, including a Japanese trader, at a discount of 50 cents a barrel to MOG on Friday and Monday. Unipec declined comment.

Traders said that with the March shopping season nearly over, they were waiting for the Official Selling Prices (OSPs) before the April-loading spot cargoes are set to begin trade next month. Taiwan's Formosa Petrochemical will shut its 180,000 barrels per day (bpd) crude unit for 30 days of regular turnaround in March, and reduce crude run rates in March by a third to 324,000 bpd, company sources said.

Abu Dhabi Murban

South Korean refiners plan to cut overall crude runs by 20,000 bpd in February despite improving margins, and they are waiting for refining profits to rise further before restoring runs, a Reuters survey showed.

New offers or bids for middle distillates-rich Abu Dhabi Murban crude were not available, after a European major was said to have sold the grade to an Indian refiner at a 15-cent discount to Adnoc earlier last week.

In the Asia-Pacific crude market, Oil Search sold last week a March-loading cargo of light sweet Kutubu Light crude at a premium of around $1.50 a barrel to Tapis APPI, traders said.

Vietnam's Petechim has cut its offer for the April-September Bach Ho crude OSP by another 10 cents to $5.16 a barrel above Minas quotes. Traders said the deal might be concluded soon but no buyers have accepted the offer yet.

The narrow Brent/Dubai spread could see more arbitrage crude from Europe into Asia.