Asia's spot oil prices rise to multi-year highs on tight supply (updated)

Fuji Oil Co (Shinagawa)

14/05/2019 08:28

* Qatar Marine, Abu Dhabi's Murban, Russia's Sokol premiums
jump
    * July-loading cargoes trade at highest premiums in at least
4 yrs
    * GRAPHIC: Spot crude premiums in Asia hit multi-year highs
on
tight supply https://tmsnrt.rs/2E5U3wi

 (Recasts lead, adds latest trades, new chart)
    By Florence Tan
    SINGAPORE, May 14 (Reuters) - Prices of Middle East and
Russian spot crude grades sold in Asia hit multi-year highs as
Asian oil buyers snapped up cargoes amid tighter supplies, trade
sources said on Tuesday.
    U.S. sanctions on Iran and Venezuela, disruptions of Russian
oil flows in Europe and maintenance at oilfields in the Atlantic
Basin and Asia have tightened global supplies and boosted Asia's
demand for spot cargoes, they said.
    Japan's Fuji Oil  5017.T  bought a July-loading Murban crude
cargo at a premium just under $1 a barrel to its official
selling price (OSP), the highest premium for the grade since
2015.  urn:newsml:reuters.com:*:nL4N22Q0RS
    Last week, Royal Dutch Shell  RDSa.L  paid a premium of $6 a
barrel to benchmark Dubai quotes for Russia's Sokol crude for
July loading, the highest premium since 2014.  urn:newsml:reuters.com:*:nL3N22M158
    For medium sour grades, the premium for July-loading Oman
crude futures to Dubai hit a high of $3.46 a barrel on Monday,
the most for this time of year in four years, while Qatar Marine
crude was sold out at 70-80 cents above its OSP, the highest
spot premiums since 2013.  urn:newsml:reuters.com:*:nL3N22M158  urn:newsml:reuters.com:*:nL4N22Q11R
    The surging premiums are a result of the confluence of
several factors limiting global supply.
    Oman and Qatar Marine prices jumped as the U.S. stopped
granting waivers to Iranian sanctions that have curtailed
exports of the so-called heavy crudes that it produces.  1OQc1 
    Asian buyers were already competing with U.S. refiners for
the same pool of resources after the United States imposed
sanctions on supplies from Venezuela, forcing buyers to turn to
the Middle East, Africa and Latin America for
replacements. urn:newsml:reuters.com:*:nL1N22F03H 
    Asia's demand for Russian and Middle Eastern light grades
such as Sokol and Murban strengthened after arbitrage supplies
from the Atlantic Basin and the United States fell.
    Rising domestic demand from refiners has pushed premiums for
U.S. crude higher curbing exports.  urn:newsml:reuters.com:*:nL3N2264DP
    The contamination of Russian Urals crude on pipelines into
Europe and the longer-than-expected closure of the North Sea's
Oseberg field have caused benchmark Brent's premium to Dubai to
surge above $3 a barrel, making Atlantic Basin oil more
expensive for Asian buyers.  urn:newsml:reuters.com:*:nL5N22M5FP urn:newsml:reuters.com:*:nL5N22M6C3
    Angolan crudes were already selling at all-time high
premiums as exports have dropped due to field maintenance while
some Nigerian production were under force majeure.  urn:newsml:reuters.com:*:nL5N22B3KY
 urn:newsml:reuters.com:*:nL5N22B5SN  urn:newsml:reuters.com:*:nL5N22I39I
    In Asia, Malaysia's Kimanis crude exports will also fall
sharply in July because of field maintenance.  urn:newsml:reuters.com:*:nL3N22L1YK
    Refiners are expecting to make up the supply shortfall from
Saudi Arabia, though the country is likely to keep its exports
below 7 million barrels per day to avoid a price crash like the
one at the end of 2018.  urn:newsml:reuters.com:*:nL5N22K6XQ
    Rising prices have pushed up costs for Asian buyers and
could weigh on regional refining margins that are at their
lowest in five years for this time of year.  DUB-SIN-REF 
 urn:newsml:reuters.com:*:nL3N22M158  urn:newsml:reuters.com:*:nL3N22L261 
    "With a tight supply side picture, Saudi Arabia is unlikely
to repeat its mistakes from 2018 and with new refineries in the
region ramping up, Asian refiners will need to pay up for
barrels," said Virendra Chauhan, a Singapore-based oil analyst
at consultancy Energy Aspects.
    Asian refiners are currently re-running computer programmes
that determine which crude grades are economical to buy as they
factor in higher spot prices, while also considering whether to
trim crude throughput, said two sources at different North Asian
refineries.
    "Refineries which are running at maximum capacities may
instead run a little lower," one of the sources said.


    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FACTBOX -Russian oil flows to Europe drop amid contamination   
 urn:newsml:reuters.com:*:nL5N22M6C3
Crude prices in Asia surge since February    https://tmsnrt.rs/2E5B70O
Spot crude premiums in Asia hit multi-year highs on tight supply
   https://tmsnrt.rs/2E5U3wi
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Florence Tan; Additional reporting by Yuka
Obayashi in TOKYO; editing by Christian Schmollinger and
Shreejay Sinha)
 ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters
Messaging: florence.tan.thomsonreuters.com@reuters.net))