|20 January, 2020

Middle East Crude-Benchmarks slip; ESPO premiums fall

Middle East crude benchmarks Oman and Dubai slipped on Monday

SINGAPORE- Middle East crude benchmarks Oman and Dubai slipped on Monday as supply outweighed demand for cargoes loading in March ahead of seasonal refinery maintenance in Asia.

Most Middle East crude cargoes are selling at discounts to their official selling prices (OSPs) this month as Asia's demand faltered. Taiwanese refiner CPC did not issue a sour crude purchase tender this month.

Thailand's PTT has bought one Das crude via a tender, traders said, likely at a similar discount seen for the grade in trades last week.

Total sold another Abu Dhabi light crude cargo on Platts window on Monday at a wide discount. It sold a Murban cargo to PetroChina at 65 cents per barrel below its official selling price.

Japanese refiner Fuji Oil has bought three medium-sour crude cargoes from the Middle East for loading in March, traders said. 

The refiner purchased two Upper Zakum crude cargoes at about 35 cents per barrel below its OSP and a Banoco Arab Medium crude cargo at a premium to its OSP, they said

Fuji Oil is seeking to buy light sour crude via another tender that will close later on Monday.

Spot premiums for Russian ESPO crude loading in March also weakened, down by about $1 per barrel from the previous month, as China's demand slowed ahead of Lunar New Year celebration, traders said.

Russian producers Surgutneftegaz and Paramount Energy sold several cargoes via tenders late last week at premiums between $6 and $6.50 per barrel to Dubai quotes, they said.

Chinese refiners typically slow down crude purchases before the Lunar New Year, while refining margins have weakened, one of the sources said.

Buyers would have a better picture of their crude demand in early February when they return from Lunar New Year holidays, he said.

ASIA-PACIFIC CRUDE

Spot premiums for regional grades stayed firm on limited supply, while an outage in Libya may further lift demand similar quality oil produced in Asia.

ConocoPhillips closed a tender on Monday to sell a Kimanis crude cargo loading on March 7-11.

Woodside sold a March-loading Pluto condensate cargo to Shell, traders said, likely at a 90-cent per barrel discount to dated Brent.

LIBYA

Two major oilfields in southwest Libya began shutting down on Sunday after forces loyal to Khalifa Haftar closed a pipeline, potentially reducing national output to a fraction of its normal level, the National Oil Corporation (NOC) said. 

If exports continue to be blocked, storage tanks will fill in a few days and production will be limited to 72,000 bpd from offshore fields and the western Wafa field, an NOC spokesperson said, down from the 1.2 million bpd production in recent months.

WINDOW

Cash Dubai's premium to swaps fell 27 cents to $2.17 a barrel.

ExxonMobil offered two March cargoes of Upper Zakum crude at a discount of 30 cents per barrel below its OSP and at $2.45 per barrel above Dubai quotes. Seller-Buyer Price Reliance-Shell 65.25 Reliance-BP 65.25 Reliance-Gunvor 65.2 Reliance-Mercuria 65.2 Reliance-BP 65.24 Unipec-BP 65.24

NEWS

India's imports of Middle Eastern oil plunged to a four-year low in 2019, tanker data obtained from sources shows, as the energy-hungry nation diversifies its supplies to cut costs and help shield itself from geopolitical tensions. 

India shipped in 2.68 million barrels per day (bpd) oil from the Middle East in 2019, down about 10% from 2018, and around 1.8 million bpd from elsewhere, the data reviewed by Reuters showed.

S&P Global Platts announced a lower limit on the viscosity levels for very low sulphur fuel oil (VLSFO) bunkers, also known as 0.5% marine fuel, for transactions in its Platts Market on Close (MOC) assessment process, it said in a note seen by Reuters. 

The U.S. Treasury Department on Saturday granted permission for Chevron Corp, the last major U.S. oil company operating in Venezuela, to continue working in the country until April 22.

Canadian oil producers and refiners have cut processing rates this week as extreme cold weather grips Western Canada, traders familiar with the matter said on Friday.

(Reporting by Florence Tan; Editing by Anil D'Silva) ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters Messaging: florence.tan.thomsonreuters.com@reuters.net))

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