Asian crude firm on improved mart demand

Asian crude firm on improved mart demand

SINGAPORE (Reuter): The Asian crude market is expected to see some support this week on improved demand as refiners return from turnarounds while Iraqi crude stays away from Japan, traders said yesterday.

They said news that Japan may not be given Iraqi crude should keep the Asian crude market from being flooded.

Japanese companies were informed by Baghdad last week that they were unlikely to be allowed to take Iraqi crude in August.

The Japanese companies said that this was probably because of Japan's political alignment with the United States and its role as both a non-permanent member of the U.N. Security Council and a member of the U.N. Sanctions Committee.

The Japanese companies were however confident that they would have access to Iraqi oil in September, but this would arrive in Asia only in October.

"The Asian market is balanced without Iraqi oil" said a western trader.

"Most of the Asian refineries would have also come out of maintenance shutdowns by September, which should boost demand" added a trader with a major oil company.

The oversupply seen in the Asian crude market in August had subsided last week as trading moved to September.

"A large volume of light crudes have moved out of the region, which has tightened the market a little" said an Australian producer.

A western trader had taken light sweet Tapis to the U.S. Gulf, while some Australian crudes had moved to Hawaii.

Light Asian crudes such as Malaysian Tapis and Australian Cossack and Griffin were trading at stronger levels for September.

The heavier Indonesian crudes, which had fallen sharply in late August trading, are also expected to see increased demand, as the limited supplies of light crudes force buyers to turn to the heavier grades, traders said.

Heavy sweet Minas traded at a premium of 15 cents per barrel to the ICP for late August deals, down from the high premiums of 75 cents seen in late July and early August.

But sellers of September Minas were holding out for premiums of 60 cents per barrel, confident of stronger demand.

Trading on the Middle East crudes in Asia is expected to be very quiet this week, since September requirements were mostly covered.

The spot price for the OPEC basket of seven crudes averaged 17.86 dollars per barrel in July, a 49 cent increase over the revised June average of 17.37, the MEES reported Monday.

The price is still down from the 18.76 dollars per barrel reached in May after a continual fall since the beginning of the year, the economic journal added.

Despite the prospect this week of the resumption of Iraqi crude exports, suspended for two months, Saudi oil giant Aramco decided to raise its prices for September deliveries from 15 to 25 cents per barrel, MEES said.