Middle East Crude-Benchmarks strengthen on China demand

Middle East crude benchmarks Oman and Dubai surged on Thursday for a fourth straight session

  

SINGAPORE- Middle East crude benchmarks Oman and Dubai surged on Thursday for a fourth straight session, supported by robust demand from Chinese buyers.

Spot premiums for ADNOC and Qatari grades strengthened as refiners continued to wait for Saudi Aramco to announce June allocation, with some expecting a cut.

Kuwait Petroleum Corp has told customers they will have to load less crude oil in June as it has set operational tolerance at minus 5% for all crude cargoes, two sources with knowledge of the matter told Reuters on Wednesday. 

Total bided a July-loading cargo of Upper Zakum crude at a spot premium of 45 cents a barrel to its official selling price (OSP) in the market-on-close price assessment process, but did not attract any sellers.

Just a day earlier, Exxon Mobil sold Upper Zakum crude to a Chinese buyer at a spot premium of 30 cents a barrel to its OSP, traders said.

China's Rongsheng has bought Murban crude, loading end-June for delivery in mid-July, likely from Total, at a premium to its OSP, traders said.

A Chinese buyer bought 500,000 barrels of July-loading Qatar Marine crude at a spot premium of close to 50 cents to its OSP, traders said.

"You cannot find any cargoes in spot discount to OSPs now," said a Singapore-based trader.

Market sentiment has improved thanks to a record production cut by the oil producers, traders said, but it remains unclear if demand outside of China is coming back.

"Margin is still unsteady... negative and shall not support such big premiums," said another trader.

Qatar Petroleum has set the June OSP for its Qatar Marine crude at $4.60 a barrel below the Oman/Dubai average, up $2.50 a barrel from the previous month. 

The June OSP for Qatar Land crude was set at $5.15 a barrel below the Oman/Dubai average, up $2.15 a barrel from the previous month.

ASIA-PACIFIC & AFRICAN CRUDE:

The supply of Malaysia's flagship crude grade Kimanis will likely to be six cargoes in July, an industry source said. Petronas will market five cargoes, while Shell will market one cargo.

Indian oil explorer ONGC has offered its second Russian Sokol crude cargo loading July 18-24 in a spot tender closing on May 15 with bids valid on the same day.

Vietnam's PV Oil has offered July-loading Su Tu Den crude in a tender closing on May 18, with bids valid till May 20. It will be either two 300,000-barrel cargoes loading July 6-12 and July 12-18, or one 500,000-barrel cargo loading July 7-13.

China's Wonfull Petrochemical has bought 1 million barrels of West African crude grade Mandji via a tender by Total at a spot premium to September ICE Brent for delivery in mid-July, traders said.

NEWS

OPEC and its allies want to maintain existing oil cuts beyond June when the OPEC+ group is next due to meet to shore up prices and demand, which has been hit by the coronavirus pandemic, four OPEC+ sources said on Tuesday. 

U.S. oil demand is set to crash by 2.2 million barrels per day (bpd) in 2020 to 18.3 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, as the coronavirus pandemic restricts movement across the world and erodes fuel demand. 

Occidental Petroleum Corp is offering its employees voluntary buyouts over the next two weeks, according to a document seen by Reuters on Tuesday, citing the sharp decline in oil prices and the coronavirus pandemic for "severe dislocations" in its business. 

Premier Oil is asking BP to cut the sale price of two North Sea oilfields in a proposed $625 million deal due to weak oil prices, Chief Executive Tony Durrant said on Wednesday.

(Reporting by Shu Zhang, editing by Louise Heavens) ((shu.zhang@thomsonreuters.com; +65-6870-3549; Reuters Messaging: Twitter @shuzhang4))

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