TOKYO: The Middle East crude market expects to be weighed down this week by weakness in light grades despite strong gas oil cracks, but distillate-rich grades in the Asia-Pacific market are seen getting support amid the maintenance of Russia’s Sokol oilfield.
Traders said that August-loading Middle East lighter grades were still plenty even though some cargoes were sold, but medium-heavy grades such as Qatar Marine crude were nearly sold out.
Qatar Marine crude, which was sold at 10-cents discount to QP on Friday, is seen selling out fast early this week, and the discount now appeared to be at a single level.
"Medium grades are rising," a trader said.
On the other hand, light sour Murban cargoes have been sold at a discount of around 10 cents a barrel to ADNOC, compared with a premium of 5 to 10 cents for first July Murban cargo.
The differentials were hurt by ample supply, after Abu Dhabi National Oil Co raised the supplies of all grades in July to its customers.
The weaker premium comes despite Asian gas oil cracks, rising for a fifth straight day on Friday to top $13.00 a barrel for the first time in almost a year on firmer regional demand.
Abu Dhabi is expected to keep its August term crude supplies little changed from July levels, some trader said.
Murban crude will be supplied at 3 percent below contract volumes in July, up sharply from 12 percent below contract volumes in June.
Traders will be also looking for the issue of Kenya’s monthly import tender as early as this week for Abu Dhabi Murban crude to help gauge buying sentiment for light sour grades.
Kenya last bought two 600,000-barrel Murban cargoes for July arrival at a lower differential than last month.
The traders will also eye Qatar’s condensate tender, which closes on Monday, for direction.
Iraq’s crude will likely get support from the nation’s notice to term buyers that it will curb supplies of medium-heavy Basra Light by an average 10 to 15 percent below contract volumes for July.
Two or three cargoes of Sakhalin-1 Sokol crude look to be available for loading in August, about half as much of the light sweet grade as there was for July loading, due to planned maintenance at the field, traders said.
The maintenance on the field is believed to be starting around Aug. 5 and is slated to last two to three weeks, the traders added.
Demand for August supplies as Russia’s Sokol field goes on maintenance was expected to draw interest for gas oil-rich alternatives, including ESPO, prompting top producer Rosneft to issue a tender for seven cargoes.
The ESPO loading program for August shows 15 cargoes will be available, trade sources said.
Traders said that the values of naphtha-rich grades and Australian Northwest Shelf condensate were still under pressure from falling naphtha cracks.".
The Brent/Dubai Exchange of Futures for Swaps (EFS) for August was valued at $1.20 a barrel, down 6 cents from late Friday.
August ICE Brent was up $1.34 at $79.56 at 0426 GMT.
