Kuwait offers full Q2 crude vol after cuts, say sources

TOKYO: OPEC-member Kuwait offered several of its Asian customers the opportunity to receive fully contracted crude volumes for the second quarter after initially announcing supply curbs, sources at term buyers said.

But the sources were unsure if full volumes would be extended when Kuwait releases its allocations for July-September, due out later this month, as it is known for complying with OPEC curbs.

Kuwait Petroleum Co (KPC) contacted at least three Asian term buyers just over a month ago with an offer of full volumes after initially announcing in March it would curb supplies between April and June.

"First we were notified of the 5 percent cut, then out of the blue they came back to us and said we could lift full volumes if we wanted," said a source at one term buyer who spoke on condition of anonymity.

The buyers were told the boost in supply was due to the shutdown of one of Kuwait‘s refineries for scheduled maintenance.

The sources and other crude traders said the move had not significantly impacted the spot market since the increase was within the operational tolerance limits and they were unsure how long it would last.

Trade of June cargoes in the Middle East spot market has come to an end and the market is shifting to front-month July trading.

Last month, Middle East light sour crude for June cargoes were traded stronger on firm gas oil crack spread.

Kuwait has been consistently cutting crude supplies since February last year as part of a record supply curb of 4.2 million barrels per day (bpd) by the Organization of the Petroleum Exporting Countries (OPEC) to combat the economic crisis, which battered demand and prices.

But the world’s fourth-largest oil exporter has restored its supply cuts before.

Kuwait initially cut supplies by 5 percent in November and December 2008, but three customers said they were later able to load their full volumes after other customers voluntarily deferred some cargoes due to weak demand.

OPEC crude oil supply has risen steadily since the production curbs were first implemented in 2008, as oil prices have almost doubled since the start of 2009 to more than $86 a barrel earlier this month, encouraging members to pump more crude.

Kuwait was believed to have pumped 2.30 million bpd of crude in April, a Reuters survey showed last month, 80,000 bpd higher than its implied target.

However, Kuwait, along with Saudi Arabia and the United Arab Emirates, has held the line and pumped close to the target. –Additional reporting by Judy Hua.