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Asian refiners expect Adnoc to continue allocating extra crude

Adnoc allocated more than two million barrels of extra crude for November-loading. ”We have already got their verbal confirmation on extra allocations,” a term lifter said, adding that it would receive volumes similar to last month. Abu Dhabi crudes for December-loading have surged to new record premiums, of up to a $1.60 a barrel premium to Adnoc, earlier this month on continued strong demand from Thailand and Japan.

Premiums started narrowing this week as refiners remained on the sidelines. But they might easily return to new record levels, traders said. ”If extra allocations are a lot, the level will drop. Otherwise, the market will get crazy again,” a refiner said. Kerosene stocks in Japan are rising, but slowly.

Total stocks of winter kerosene fuel in Japan are expected to rise to 4.6 million to 4.7 million kilolitres (kl) by the end of October, Fumiaki Watari, president of the Petroleum Association of Japan said. But despite the rise, inventories of kerosene will remain 5-7 per cent below levels a year ago as Japan heads into winter. The rising prices of Abu Dhabi crudes have brought support to other, slightly heavier and more sour crudes, such as Oman and Qatari crudes.

Middle East sour crude benchmark Oman continued at strong levels, though slightly lower than on Tuesday, with a US trader offering December Oman at a strong 50 cent-a-barrel premium to MOG amid thin availability. No bid was heard.

Qatari crude for December-loading was also largely sold out, as refiners rushed to buy it as an alternative to Abu Dhabi barrels. One Qatar Marine cargo might still be available, in the hands of a US independent, traders said. On the Asia-Pacific market, December trade had yet to start, with Malaysia’s Petronas yet to finalise its December loading programme.

Australia’s Woodside Petroleum Ltd. said yesterday oil production from the North West Shelf joint venture’s Cossack-4 well would not likely resume before November and liftings have been rescheduled accordingly.

November loadings have been delayed by three to five days, traders said, with the last cargo of the month, in the hands of a European major, delayed into early December. The joint venture, operated by Woodside Petroleum Ltd. said last week it had problems restarting the Cossack-4 well after routine maintenance from September 6-12.

The problem has cut average output by 15,000 bpd. The Brent/Dubai Exchange For Swaps (EFS) for December widened by some 65 cents against yesterday midday to stand at $10.60 a barrel after a US trader bought the EFS at rising levels, traders said. ”The company is bullish on Brent/Dubai.

Freight is getting more and more expensive,” a trader said.