SINGAPORE- Middle East crude benchmarks, Dubai and Oman, extended gains on Tuesday with their premiums touching fresh highs this month.
Market sentiment is bullish on the back of OPEC and Russia output cuts, U.S. sanctions on Iran and Venezuela and a conflict in Libya that could disrupt supplies.
Demand has also been rising as Chinese independent refiners sought more crude to use up the rest of their import quota while Asian refiners are set to ramp up output after a maintenance season.
ASIA-PACIFIC CRUDE: Prices for Australian heavy-sweet crude grades are rising as traders snap up cargoes for blending ahead of new rules on shipping fuel, putting them among the most expensive crudes in the world.
The high premiums are benefiting producers such as BHP Group, Santos Ltd and Inpex Corp, which sell grades such as Pyrenees and Van Gogh produced offshore western Australia.
The two grades have been sold at premiums of more than $7 a barrel to dated Brent, up more than $1 from the previous month, after Shell and Mitsui snapped up one May-loading cargo each, three trading sources said.
The high premiums reflect the blending value of the low-sulphur crudes for mixing with higher sulphur residue fuel onboard ships or in storage tanks to create low-sulphur fuel oil (LSFO), the sources said.
Chinese and Indian refiners who typically buy these Australian heavy-sweet grades have stayed on the sidelines after premiums for these grades jumped, they said.
"People are putting it into their system for IMO. If you're trying to set up with supplies to be ready to rock and roll, this is the right time to do it," said a second source, a crude oil trader who handles such grades.
Among different crude grades, heavy-sweet oil is the most suitable to be used for ship engines as it has a higher flash point, he added. Crudes with a low flash point ignite easily and can cause engine issues.
South Korea's S-Oil Corp has shut the 73,000 barrels-per-day (bpd) residue fluid catalytic cracker (RFCC) since late March due to a technical glitch, two sources familiar with the matter said.
Formosa Petrochemical Corp will raise the throughput at its crude oil refinery from the second-half of April after finishing maintenance at a crude unit, a company spokesman said.
Shell confirmed labour strikes started on Monday at its 404,000 barrel per day Pernis oil refinery in the Netherlands and that production would be affected.
U.S. buyout firm Carlyle Group has agreed to buy between 30 and 40 percent of Spanish energy company Cepsa from Abu Dhabi state investor Mubadala, valuing the stake at as much as $4.8 billion.
Indian refiners are holding back from ordering Iranian oil for loading in May pending clarity on whether Washington will extend a waiver from U.S. sanctions against the OPEC-member, four sources said.
One of the key Russian officials to foster a supply pact with OPEC, Kirill Dmitriev, signalled on Monday that Russia wanted to raise oil output when it meets with OPEC in June because of improving market conditions and falling stockpiles.
Saudi Aramco has received bids for more than three times the $10 billion it was expected to raise in a debut international bond issue, which is being watched as a gauge of potential investor interest in the oil company's eventual initial public offering.
Shell has entered China's shale oil sector, signing an agreement with state-owned Sinopec to study an East China block, part of the nation's early efforts to unlock the potentially massive unconventional resource.
A warplane attacked Tripoli's only functioning airport on Monday as eastern forces advancing on the Libyan capital disregarded international appeals for a truce in the latest of a cycle of warfare since Muammar Gaddafi's fall in 2011.
(Reporting by Florence Tan; Editing by Uttaresh.V) ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters Messaging: email@example.com))