DUBAI: Supply tightness kept gasoline and naphtha premiums firm in the Middle East, with traders seeing no sign of easing until early 2011 on the back of continuing refinery maintenance shutdowns.
Outages in Kuwait and Oman have tightened up the Gulf gasoline market, where a lack of cargoes from Singapore due to closing arbitrage window has also contributed to the shortage.
"Gasoline is very tight and very expensive right now," one gasoline trader said.
Kuwait National Petroleum Company (KNPC) has shut some units at its Mina Al-Ahmadi and Mina Abdullah refineries for maintenance, while Oman Refineries and Petrochemical Co (ORPC) has shut its 116,000 barrel per day (bpd) oil refinery in Sohar.
Traders said supplies looked to remain scarce until early next year with other refineries in the region in maintenance.
Two traders pegged at around Middle East benchmark naphtha quotes plus $65-70, almost unchanged from last week.
The market continued to keep an eye on Iran, a major buyer of gasoline before the US-led sanctions prompted its gasoline suppliers to halt business with the Islamic Republic.
Iranian Oil Minister Massoud Mirkazemi told Reuters last week that Tehran is pressing ahead with gasoline imports as well as exports, but he did not give details on where the country was importing its motor fuel from.
Naphtha
Naphtha markets have been equally tight, traders said, making blending for gasoline uneconomical.
"It was too expensive for naphtha to go into blending," one trader said.
The market was likely to remain tight, they said.
Saudi Aramco, Asia’s top naphtha supplier, will reduce supplies to Asia by at least 580,000 tonnes in the first half of 2011 due to planned maintenance at two of its refineries.
Kuwait Petroleum Corp has sold 24,000 tonnes of light naphtha for late December loading to South Korean trading house Hanwha Corp at a stronger premium due to tight supplies in Asia, traders said on Friday.
Gas Oil
Low sulphur gas oil continued to be in demand, traders said. There were no tenders from East Africa this week, but Kenya, which normally taps the market once a month, could return to the market next week, they said.
Kenya, Tanzania and Mozambique — all major product importers due to insufficient refining capacity — are gravitating their gas oil purchases to the 500 ppm gas oil from 0.5 gas oil, which has a higher sulphur content
This buoys the premiums in the market.
One trader pegged premiums for 500 ppm gas oil at $2.20-2.30 a barrel, unchanged from last week, compared with $2-2.10 a barrel the week before.
"500 ppm is hard to find, it’s not easily available, I heard that major producers are all sold out," one middle distillates trader said.
Saudi Aramco is seeking bids for its gas oil term purchases for 2011, where it is looking to buy at least 4 cargoes per month, trade sources said on Thursday.
Fuel Oil
Supply tightness dominated the fuel oil market as well, trader said.
Three December-loading fuel oil cargoes, totaling up to 270,000 tonnes, from Saudi Arabia, were sold steady to stronger price levels amid a tightly-supplied market this month.
The downside is limited by tightening supplies from the Middle East, with 400,000-450,000 tonnes of December-loading fuel oil offered or sold so far, down from 500,000-550,000 tonnes for November lifting.
Supplies into East Asia have been tight for two months, with 3.2-3.3 million tonnes of Western arbitrage cargoes expected for December, while 2.7-2.8 million tonnes have been booked for January and more expected, with the West-to-East arbitrage window open.
Pakistan State Oil issued a tender seeking up to 780,000 tonnes of high-sulphur fuel oil for January-February delivery, a tender document showed on Monday.
