Middle East gas oil soars

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Middle East gas oil soars ..........SINGAPORE (September 28) : Middle East gas oil premiums have doubled in less than two months, underpinned by large arbitrage exports to the Mediterranean and Egypt, traders said on Wednesday.

They said one medium range 0.5 percent sulphur cargo was sold this week out of the Red Sea at a $2.10 per barrel premium over prevailing spot prices, compared with premiums of around $1 in early August.

"Premiums are at their highest level in several years, maybe the highest since the Gulf War," a Middle East trader said.

..........Traders said over the past week several Middle Eastern oil companies, including Kuwait Petroleum Corp (KPC), National Iranian Oil Co and Bahrain National Oil Corp, had sold spot gas oil cargoes at premiums of between $1.70 to $2.00 per barrel, all on a free-on-board basis.

"The Middle East is holding up very nicely because we've got all this demand coming from the Med and Egypt," one Gulf-based trader said.

Traders said the Middle East oil was used to cover commitments to Egypt, which earlier this month awarded a tender to buy up to 525,000 tonnes for delivery into Suez in the fourth quarter and up to 165,000 tonnes into Alexandria.

.........."The Suez cargoes all went at Med prices minus big discounts so there's no way these cargoes can be covered from the Med. They have to come from the Middle East and the Red Sea is the best source," another trader said. ..........Traders said apart from Egypt, demand was also surfacing from the Mediterranean where prices were hovering at just over $300 per tonne compared with Middle East prices of about $265. .........."At this price, even with premiums at $2, you can still move cargoes to East Med countries," a trader said. ..........Traders said that as a result of a large export programme to the West, no spot Middle East gas oil was slated for shipment to Asia in September and probably not in October. .........."The only Middle East gas oil that is coming here is the KPC term barrels to Indonesia. The prices here are too low for cargoes to come this way," a trader said.

The absence of Middle East supplies could help stem the current price slump in Asia. The fall has been mainly crude-led but also exacerbated by a slowdown in regional demand coupled with an increase in supplies.

Spot premiums in Singapore fell to a 20 cents discount on Thursday against premiums of about $1.00 at the start of September.

Spot supplies in Asia have been boosted by rare exports from India and additional shipments from Thailand and Taiwan.-Reuters ..........Copyright 2000 Reuters (Published under arrangements with Reuters)

http://www.brecorder.com/story/S00DD/SDI28/SDI28251.htm

-- Martin Thompson (mthom1927@aol.com), September 27, 2000


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