Crude outlook: Heavy grades tightening<\/p>\n
SINGAPORE (Reuters): The Asian crude market is expected to
\nremain steady this week, as the limited July supplies of heavy
\nIndonesian grades are facing good demand, traders said yesterday.<\/p>\n
Traders said expectations of tighter availabilities of Middle
\nEastern crude oil as a result of the OPEC cutbacks were leading
\nsome Asian refiners to increase their purchases of regional
\ngrades, helping keep Asian crude prices supported.<\/p>\n
"One or two refiners are buying a lot of Far East crudes,
\nbecause they feel it is economical, since Middle East supplies
\nwill be less," one Japanese trader said.<\/p>\n
Currently, only Saudi Arabia and Qatar have informed term
\nbuyers of reductions in July term liftings, but traders said they
\nexpected to be notified by other Middle East producers soon.<\/p>\n
Last week OPEC members pledged to cut 1.355 million barrels-
\nper-day (bpd) for a year from July 1, although skepticism
\nremained on whether all the pledged cuts would be realized.<\/p>\n
But the cutbacks are expected to affect mainly Middle East
\nsupplies, as few Asian refiners are likely to be drawn to
\nreducing their production, traders said.<\/p>\n
Indonesia, Asia's only OPEC member has said that it would
\nabide by the OPEC cutback agreement.<\/p>\n
But non-OPEC producer Malaysia said on Monday it had not been
\nasked by OPEC to reduce its 630,000 bpd output.<\/p>\n
Indonesia's export allocations for July, delayed since the
\nmiddle of the month, was finally announced last week, with heavy
\nsweet Minas reduced to 28,300 bpd, compared to 40,000 bpd in
\nJune.<\/p>\n
Heavy sweet Widuri allocations for July was set at 7,000 bpd
\nfrom 15,000 bpd in June, while Cinta volumes were unchanged month
\non month at 9,000 bpd.<\/p>\n
The smaller export volumes from Indonesia, coupled with the
\nslight increase in Japanese demand has pushed the spot premiums
\nof Minas to around 23 cents per barrel over the official
\nIndonesian Crude Price (ICP), levels unseen since early May.<\/p>\n
The improved fundamentals in Asian crudes was also being
\nreflected in the spot levels of Vietnam's heavy sweet Bach Ho
\ncrude.<\/p>\n
Bach Ho, which has been trading on the spot market at
\ndiscounts to its official selling price (OSP) since March, moved
\nup to trade at parity to its OSP end last week.<\/p>\n
Traders said Vietnam's tender to sell August Bach Ho which
\nclosed on Thursday also attracted bids at a small premium to the
\nOSP.<\/p>\n
In the Middle East crudes, traders expected August trading to
\nstart in earnest this week.<\/p>\n
They said heavy to medium grades such as Oman would be
\nsupported, but lighter grades could face limited price rises, due
\nto ample stocks of middle distillates in Japan.<\/p>\n
They also said that despite the overall lower Middle East
\nsupplies following OPEC cuts, the heavy to medium grades are
\nexpected to reap the benefits of a tighter market, since
\nproducers would prefer to maximize production of the higher
\nvalued lighter grades.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/crude-outlook-heavy-grades-tightening-1447893297",
"image": ""
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