|30 May, 2019

Middle East Crude- Benchmarks slump, Shell buys more cargoes

Middle East crude benchmarks slumped on Thursday

SINGAPORE- Middle East crude benchmarks slumped on Thursday, the second-last trading day this month, despite Shell's purchases on Platts window.

DME Oman's premium to Dubai swaps dropped 51 cents to $1.53 a barrel, the lowest since mid-April, while cash Dubai's premium to swaps fell 36 cents to $1.76 a barrel, the weakest since late April, Reuters calculations and data showed.

Shell bought most of the July Dubai partials on window which led to a delivery of an Oman crude cargo from Unipec. The oil major also purchased an August-loading Murban crude cargo from Total at 35 cents a barrel above its OSP.

This brings Shell's total cargo purchases this month to 16.

Meanwhile, Brent's premium to Dubai swaps widened 17 cents to $4.32 a barrel, the highest since May 2018, Refinitiv data showed.

OSP PREVIEW: Saudi Arabia is expected to raise prices for all crude grades it sells to Asia in July for a third straight month after Middle East crude benchmarks jumped, trade sources said. 

The producer is likely to increase the official selling price (OSP) for flagship Arab Light crude by up to $1 a barrel to the highest since January 2014, a Reuters survey of four sources at refineries showed.

The extent of Saudi Arabian price hikes depends on whether the country takes into account weaker margins for naphtha and fuel oil, the sources said, as those would lead to smaller price gains for grades such as Arab Extra Light and Arab Heavy that have a higher yield of such products.

The market structure "is very bullish but refining margins do not support that", one of the sources said.

Separately, UAE's ADNOC may raise the OSP premiums for light grades — Murban, Das and Umm Lulu — to Dubai quotes by 50 cents to 80 cents a barrel, traders said. The grades were sold at premiums close to $1 a barrel above their respective OSPs but the premium for Murban slumped to as low as 20 cents a barrel at the end of the trade month.

Upper Zakum's OSP to Dubai quotes may rise by 70 to 80 cents a barrel, they said.

RUSSIA: Surgutneftegaz sold an ESPO crude cargo loading on June 22-23 to Glencore at a premium just above $3 a barrel to Dubai quotes, traders said, adding that the premium was lower because the cargo sold at short notice.

ESPO Blend oil exports from the Far East Kozmino port were set at 7.7 million tonnes for July-September 2019 against 7.8 million planned for loading in April-June, three industry sources familiar with the plan told Reuters. 

ASIA-PACIFIC CRUDE: ConocoPhillips has sold a Kimanis crude cargo loading on July 29-Aug. 2 at $6.20 a barrel above dated Brent. The buyer was not immediately known.

Petronas has also sold two cargoes of its new crude Kayu Manis which will be exported to Australia, traders said. The first cargo loading in June was sold at a small premium while the second cargo fetched $1.50 a barrel above dated Brent, they said.

REFINERY

JXTG Nippon Oil & Energy Corp plans to shut the 145,000 barrels-per-day crude distillation unit at its Sendai refinery by mid-June for scheduled maintenance, a company spokesman said. 

NEWS

Arab leaders gathered in Saudi Arabia on Thursday for emergency summits that Riyadh hopes will deliver a strong message to Iran that regional powers will defend their interests against any threat following attacks on Gulf oil assets this month. 

Exxon Mobil Corp shareholders on Wednesday rejected a proposal to split the chief executive officer and board chairman roles that some had promoted to protest a decision to strike an unrelated climate change resolution from the ballot. 

More than a month into the biggest crisis to hit Russia's Druzhba ("Friendship") pipeline, operator Transneft and the government are at odds over who should pay to clean up the contamination that halted flows. 

Swiss metals trader ArrowMetals AG has agreed to buy AOT Holding Ltd from Belgian billionaire Albert Frere's family and employees of its trading unit, the firm said. 

Canadian Natural Resources Ltd said on Wednesday it would buy the Canadian assets of U.S.-based Devon Energy Corp for C$3.8 billion ($2.81 billion) in cash, investing further in Canada's struggling energy sector as some rivals divest. 

Iranian crude exports have fallen sharply in May to around 400,000 barrels per day (bpd), tanker data showed and two industry sources said, after the United States tightened the screws on Tehran's main source of income. urn:newsml:reuters.com:*:nL8N234504

Around 200 Norwegian offshore oil and gas workers plan to go on strike on June 4 unless pay negotiations lead to a deal with employers, the Lederne labour union said on Wednesday. 

(Reporting by Florence Tan; editing by Uttaresh.V) ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters Messaging: florence.tan.thomsonreuters.com@reuters.net))

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