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Tuesday, 11 September 2012 01:11 - - {{hitsCtrl.values.hits}}
SINGAPORE (Reuters): High sulphur gasoil premiums fell on Monday as demand faltered in the region with the start of monsoon rains in Pakistan and a restart of Sri Lanka’s refinery after an unplanned shutdown, traders said.
The cash premiums for the benchmark 0.5 percent sulphur gasoil fell by eight cents to 85 cents a barrel above Singapore quotes, a more than one-month low, Reuters data showed.
Prices fell after Pakistan State Oil decided not to buy 305,000 tons of gasoil for September-December delivery, because of high offers and a dip in domestic demand due to increased rainfall, which boosted hydropower generation, industry sources said.
PSO’s gasoil tender had initially buoyed premiums.
The company also received two term cargoes from its long-term supplier Kuwait Petroleum Corp (KPC) for September and October and a spot cargo it recently purchased from Vitol for late August, which was sufficient to meet demand, one of the sources familiar with the matter said.
“With the increased rainfall, the diesel demand has dropped, so there was no need to buy spot, especially at such high numbers,” the source added.
Sri Lanka’s Ceylon Petroleum Corp (Ceypetco) plans to restart production at its sole 50,000 barrels-per-day (bpd) refinery by Wednesday, which could reduce its spot imports of gasoil and jet fuel.
It issued a tender over the weekend to seek 310,000 barrels of jet fuel and gasoil for prompt delivery on Sept. 23, to cover domestic shortfall as the refinery ramps up production, industry sources said.
It separately bought a gasoil cargo from Gunvor for Sept. 19 delivery at a premium of $3.38 a barrel above Singapore quotes.
Vietnam’s Petrolimex is yet to buy all of the gasoil cargoes it sought for September loading in a tender that closed last week, a source familiar with the matter said.
In the Middle East, Kuwait Petroleum Corp sold a jet fuel cargo for Oct. 7-8 loading likely to Vitol at a premium of about $3-3.25 a barrel above Middle East quotes, up to 25 percent higher than an earlier cargo sold for September loading, traders said.
The jump in premiums is likely due to attractive arbitrage opportunities to send the cargo to Europe, one of the traders said.
Abu Dhabi National Oil Co’s diesel tender to sell about 80,000 tons of the 10 ppm sulphur grade is likely to be awarded at around $5.80-$5.90 a barrel premiums above Middle East quotes, traders said.
The tender closed on Sept. 5 and is valid until Sept. 10.
The cargo is able to meet European summer fuel specifications and is likely to fetch a higher premium because of that, they added.
