Japanese demand spurs RI's Minas crude
Japanese demand spurs RI's Minas crude
SINGAPORE (Reuters): Recent disruptions to gas output in
Indonesia have proved a boon for the country's Minas crude oil
exports, as hungry Japan power plants eye the grade as an
alternative fuel, traders said on Tuesday.
Japan utilities, keen to secure fuel stocks ahead of the peak
demand summer months, are considering taking extra barrels of
Minas for May, which has led to the crude's premium versus the
official selling price (OSP) to jump to about 50 cents a barrel.
Minas now stands at the highest premiums over OSP for at least
four months and was trading at a discount to the OSP at the start
of the year.
"Most utilities and refiners have to build burning fuel stocks
before the summer in June and July, but this year the Indonesia
LNG plant outage could be a main factor for them to start early,"
one Tokyo-based trader said.
Japan has been scrambling since mid-March for alternative fuel
sources for power generation after LNG supplies from Exxon Mobil
were curtailed when the company closed gas fields in Indonesia's
Aceh province due to security concerns.
Sentiment for the medium sweet crude is further made bullish
by the small size of the spot market, most term contract buyers
do not resell their cargoes.
Major sellers, Chevron and Texaco -- which jointly own Minas
field operator Caltex Indonesia, were due to offer a total
500,000 barrels for May.
The crude normally trades in small parcels of between 50,000
and 150,000 barrels.
Traders said Indonesia's state oil company Pertamina is
unlikely to see any great benefit from higher Minas premiums
because it exports mostly on term contracts, which were fixed at
about ICP +30 cents this year.
Pertamina may also be hampered from offering extra Minas
barrels for May because its Balongan refinery is due to restart
at the end of March after a scheduled maintenance closure.
Minas and Duri crudes make up to 60 percent of Indonesia's
total crude production of just under 1.3 million barrels per day.
Traders said unlike Minas, the Duri market was lacklustre.
Korean utilities, which can use the heavier Duri crude for
burning, have not been seen raising import demand so far.
Japan rarely buys Duri as the grade's specifications are
unsuitable.
Oil price
Meanwhile, oil prices held firm on Tuesday as the market
continued to focus on U.S. stocks of gasoline. Fresh data due
later in the day was expected to show a renewed draw in U.S.
inventories.
North Sea bellwether Brent crude climbed 20 cents in opening
dealings while U.S. benchmark light crude traded six cents off at
$27.42 a barrel.
Crude has gained almost one dollar in the last two sessions
amid rising concerns that lean gasoline stocks in the world's
biggest energy consumer will lead to a repeat of last year's
spike in U.S. pump prices.
A top U.S. oil executive warned on Tuesday of a potential
gasoline supply crunch in the months ahead.
"We are going to have problems with gasoline...because of
different specifications" due to environmental regulations,
Archie Dunham, head of Conoco Inc, told an industry conference in
Dubai.
"There could be a fundamental shortage," said Dunham, who
leads the fourth largest U.S. oil company.
Gasoline prices hit record levels in 2000 as refiners
scrambled to meet new environmental requirements for cleaner-
burning grades just as U.S. motorists hit the road for summer
vacations.