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ME gas oil prices decline on cancelled Pakistan cargoes

Kuwait Petroleum Corp (KPC) sold two 80,000-tonne cargoes of 0.2 per cent sulphur gas oil for September delivery to Indonesia’s Pertamina, after the parcels were diverted from Pakistan, traders said on Thursday. The cargoes were sold at a premium of $1.00-$1.10 a barrel to Middle East spot quotes, down from $1.10-$1.50 a barrel done last week, traders said.

Apart from homes, the floods have swept away roads, bridges and telecommunications as well as reducing domestic fuel demand.

“I expect that PSO may cancel more cargoes of gas oil from their term contract with Kuwait Petroleum with some flooding in Karachi area,” he added.

The trader pegged regional premiums for 500 ppm at $2.50 per barrel, 0.2 per cent gasoil at $1.30 barrel, 0.5 per cent at $1.10 per barrel and jet at $0.80 per barrel. “I think, even if things (in Pakistan) are back to normal, imports will not be the same as before,” said a second trader. “I expect the situation to remain weak for the high sulphur gas oil,”
he added. “September is a transitional month, prices drop due to usually weaker demand,” he said.

Pakistan has also deferred two low-sulphur fuel oil (LSFO) cargoes for delivery in August, and may delay one or two high-sulphur fuel oil (HSFO) parcel. “I see fuel oil holding despite what happened in Pakistan,” a trader said.

Saudi Aramco sold a September-loading A961 fuel oil parcel, totalling 90,000 tonnes, at the lowest price in more than two years amid rising supplies next month, traders said last week. Fujairah bunker prices for 180 centistoke (cst) range from $3 to $5 a tonne above Middle East spot quotes, up from $1 to $3 a tonne last week, traders said.

“The market is tightly supplied...going into September, things will get tighther and premiums will gradually go up for the bunkers,” a second
trader said. One trader pegged premiums at $4 to $7, unchanged from last week. The naphtha market has strengthened on improved demand.

“It is a buying spree...people are relating it to Adnoc splitters shutdown,” said one trader. Saudi Aramco sold 55,000 tonnes of naphtha at higher premiums compared to a sale last week, thanks to robust prompt demand despite high spot volumes from the Middle East, traders said on Thursday. Kuwait Petroleum Corp (KPC) has sold nearly 150,000 tonnes of naphtha for second-half September loading at premiums of $17.00-$18.00 a tonne to Middle East spot quotes on a free-on-board (FOB) basis, traders said on Thursday.

State-run Abu Dhabi National Oil Co (ADNOC) has bought up to 180,000 tonnes of gasoline from US oil major ConocoPhillips, traders said on Wednesday. Demand for gasoline is expected to be bearish in the coming weeks, said a trader.

“There is no change, there is still a lot of gasoline in the market,” said a second trader. ADNOC paid for cargoes at Mediterranean spot quotes plus $18 a tonne to Mediterranean quote on a cost-and-freight (C&F) basis

Prices were below market expectations, one trader said.

“People are really desperate to lock up any available outlet in the region,” he said. State oil giant Saudi Aramco paid last week $14 a tonne to Mediterranean quote on a cost-and-freight (C&F) basis for three to four cargoes. “No demand after these cargoes, It is going to be dead in the next few weeks, unless Aramco is going to buy.” —