SINGAPORE: A glut of gasoline, diesel and other fuels in Asia has cut prices of Middle East crudes such as Oman and Abu Dhabi’s Murban as refiners buy less oil.
Oil product inventories in Japan, Asia’s biggest economy, are at the highest since November 2005, according to weekly industry data. In South Korea, fuel stockpiles in August are near a three-year high, Korea National Oil Corp data showed.
Oman and Abu Dhabi both cut prices of their crude this week against Dubai, a regional benchmark.
Nippon Oil Corp, Japan’s largest refiner, and South Korea’s GS-Caltex Corp have cut output as abundant fuel supplies cut profit from processing crude.
To maximise margins, refiners are buying more so-called sweet, low-sulphur crudes from Angola and Nigeria that yield more high-value gasoline than sour Arabian Gulf grades, oil trader Anthony Nunan said.
“Apart from rising product inventories in Asia, prices of Arabian Gulf grades are also under pressure on the possible influx of West African crude into Asia,’’ said Nunan, assistant general manager for risk management at Mitsubishi Corp in Tokyo.
The Brent-Dubai exchange for swaps for November, which measures relative demand for African and Middle East crudes, was $2.20 a barrel October 3, the narrowest in at least two years, said three brokers surveyed by Bloomberg News. The spread for November was $3 a barrel yesterday.
SK Corp, South Korea’s biggest refiner, booked the Flandre, a very large crude carrier, or VLCC, on Friday to load a cargo of Chad’s Doba Blend and Angola’s Nemba grades on November 11, according to data compiled by Bloomberg.
Chinese trader Sinochem International Co on October 2 booked the Patris, a VLCC, to carry about 2mn barrels of West African crude to China on October 20, Bloomberg data showed.
“West African grades are competing with Arabian Gulf grades,’’ said SJ Jung, an oil trader at GS-Caltex Corp in Seoul said. “There’s little demand for Arabian Gulf crudes.’’ – Bloomberg