Minas crude steady on Aussie demand
Minas crude steady on Aussie demand
SINGAPORE (Reuter): Spot premiums of Indonesian low-sulfur, sweet crude oil Minas, were steady on tight supplies, exacerbated by a refiner's import of 600,000 barrels to Australia, industry sources said yesterday.
Sources added that over the past two weeks, a European refiner bought at least 600,000 barrels of June lifting Minas crude for its refinery in Australia. This compared to a typical monthly import of 200,000 to 400,000 barrels by Australia.
"The refiner usually buys low-sulfur waxy residue (LSWR) for its Australian refinery feedstock. But, prices of LSWR have risen to levels that are too expensive. The alternative is to take Minas," one trader with an Australian firm said.
Spot prices of LSWR have risen by about US$2 per barrel since April to over $18 presently. Traders said the market was underpinned by Indonesia's lower export availabilities of 3.4 million barrels in June, compared with 3.7 million in May.
Absolute prices of Minas have held relatively steady at $18.40-$19.00 per barrel since April although premiums have risen from parity to ICP to about 40-45 cents now.
Sellers premiums, targeted at 45 cents per barrel over Indonesian Crude Price (ICP) were expected to be achieved as traders said most supplies were now in the hands of an equity- producer.
Traders added the inability of endusers to move West African alternatives such as Cabinda into Asia due to a surge in Brent prices added to tight supply of low-sulfur crude oil in Asia.
In contrast to strong Minas prices, spot premiums of Indonesian low-sulfur heavy grade, Duri, have fallen from their peak of $1.60 over ICP to be offered at $1.10-1.20 on Friday.
Traders attributed the slide to emergence of fresh sellers lured into the spot market by the attractive premiums but only to face sluggish demand. Demand from fuel oil blenders weakened as prices of fuel oil fell.
Spot prices of fuel oil in Singapore fell to $96 per ton from about $100 last Friday.
Traders estimated about 500,000 barrels of fresh June lifting Duri supplies were available on Friday.
In general, crude oil prices in Asia were stable in lackluster trade yesterday ahead of a long weekend in most of Europe and the United States.
Continued position squaring was felt likely to dominate activity in London and New York as most traders appeared reluctant to hold positions into the following week amid recent volatility and uncertain market direction.
On NYMEX after trading hours ACCESS system, July was trading around US$21.18 per barrel against its New York close at $21.23.
Cash July Brent was at $19.85/19.95. On SIMEX, it was trading around $18.90 against its IPE close at $18.89.
Brent/Dubai spread widened by 10 cents, with July at $1.75/1.85 and August at $1.50/1.55.
July/August Dubai spreads widened by 10 cents to 40/50 cents, underpinned by India's healthy purchase of four July cargoes. In June, it took one to two cargoes only. India also bought three VLCCs of Nigerian Qua Iboe in its tender. Against dated Brent, premiums were at $1.00, $1.049 and $1.0295 per barrel cost and freight basis.
July Oman premiums stayed firm, with remnant offers targeted at 13-15 cents. Offers of Murban remained at 40 cents premium, with parcel lots of 250,000 barrels left.
Malaysia's target offer of July Tapis was at APPI Tapis plus 50 cents. Keen interest was seen from refiners in Singapore.
Spot offers of Australian Jabiru and Challis continued to ride on Tapis' bullishness. Sell premium of end June Jabiru was at 50 cents while Challis was at 80 cents.