Premium recovery expected for Asian crude

Premium recovery expected for Asian crude

SINGAPORE (Reuters): Premiums on Asia's sour crude market are
expected to show some recovery as June trade kicks off this week,
with demand expected to pick up as refineries return from
maintenance stoppages, traders said on Monday.

Traders forecast benchmark medium sour Oman to rise to MOG
+10/+15 cents for June barrels, up from May's MOG -5/+3 cents.

"Demand will pick up without supply increasing," one trader
with a oil major said.

A heavy schedule of maintenance shutdowns in April and May
curbed Asian refiners' appetite for crude in the last two months.
Demand is expected to rebound with many plants resuming
production.

But key producers in the Organization of the Petroleum
Exporting Countries (OPEC) are unlikely to raise supplies to the
market given output cuts of 2.5 million barrels per day agreed by
the cartel so far this year.

"OPEC will not do anything (to adjust supply) until prices go
back to $30 a barrel," another trader said.

Benchmark U.S. NYMEX crude futures were trading on Monday at
around $28.30 a barrel.

Most Asian buyers have been notified of a rollover in deep
cuts of 10 to 15 percent to term crude volumes in May by leading
OPEC producers Saudi Arabia, Kuwait and Iran.

Traders said the market will be keenly watching for signs of
disruptions to Iraqi crude exports in June as the current phase
of the oil-for-food program comes up for renewal by the United
Nations.

The UN monitors all crude exported out of Iraq under
sanctions slapped on Baghdad following the invasion of Kuwait in
1990. The current phase of the oil-for-food program began on
December 5.

"You know what happened the last time, the rollover didn't go
smoothly," one trader said.

Exports from Iraq have been erratic since late November when
Iraq began demanding a surcharge from buyers.

Many Asian buyers have shied away from Iraqi crude because of
the disruptions, but key importers India and Taiwan have
continued to lift Basrah Light crude.

India and Taiwan also are due to buy other crude grades via
tenders this week.