MidEast Gasoil premiums surge on tight supplies
In the face of strong summer demand, supplies of gas-oil premiums have tightened
July 24, 2012 3:27 by Reuters
Gasoil premiums in the Middle East Gulf market have soared over the past couple of weeks as the supplies tightened in the face of strong summer demand.
Demand for gasoil, used in power generation and as transporation fuel, usually climbs higher in summer months as temperatures rise near to a scorching 50 degrees, boosting the use of air-conditioning and as travel traffic increases during the Muslim holy month of Ramadan.
“We’re looking at a very tight market with very expensive premiums,” one middle distillates trader said. He quoted low sulphur 500 ppm gasoil at $5 a barrel, compared with $4.20-4.30 a barrel in early July. Another trader pegged 500 ppm at around $4.60 a barrel on a free-on-board (FOB) basis.
Saudi Aramco was among the biggest gasoil buyers and had ramped up its purchases ahead of Ramadan. But traders say the state-oil giant is now covered for July and August.
“They are pretty much done for August although they might pick up one or two more cargoes,” another trader said.
Apart from Aramco, purchases from Yemen and Jordan as well as East African countries have helped drive the premiums higher, traders said.
Yemen, whose long-shut oil pipeline has resumed production last week, is still seeking oil products as its refinery has not started processing crude yet. The country sought 60,000 tonnes of gasoil on top of the half a million tonne it bought for July and August in earlier tenders.
In Asia, the tight market was aggrevated by some partial refinery shutdowns like the maintenance in Shell’sSingapore refinery, coming at a time when traders seek spot cargoes.
(Reporting by Humeyra Pamuk, editing by William Hardy)