Thursday, 16 July 2009 at 09:33, Reuters, Singapore
Saudi Aramco has offered 90,000 tonnes of A961 fuel oil for early-August loading from its Ras Tanura refinery, its fifth parcel in just over a month, traders said on Thursday.
The 180-centistoke (cst) cargo is for Aug. 4 loading on a free-on-board (FOB) basis and offers are expected by Friday, with a one-day validity.
Saudi Aramco had been selling cargoes from Ras Tanura, although the kingdom is in the midst of the summer fuel oil demand season, due to to the extended shutdown of a 44,000 barrels per day (bpd) hydrocracker at the facility, after a planned early-June restart failed.
The problem-ridden diesel-making unit was originally scheduled to restart in early June after repeated delays following an early-March outage.
Aramco last sold a similar parcel, for July 17-18 lifting, to United Arab Emirates (UAE) trader FAL Oil at a premium of about $2.00 a tonne to Singapore spot quotes, FOB.
The last four parcels, for June to July loading, were transacted at premiums of $1.00-$2.50 a tonne to spot quotes, FOB.
Traders said the strike price could be higher this time round due to a tighter market that has seen premiums for the benchmark 180-cst grade surge to $7.00 a tonne and the product's front five timespreads being steeply backwardated.
Reflecting the strength of a market supported by the belief that supplies will be tight this year on lower refinery runs and steady Asian bunker demand, fuel oil's August crack was valued at a discount of $2.56 a barrel to Dubai crude at Wednesday's close, and above minus $3.00 for only a second time since February.
"The market has strengthened quite a bit since the last deal. And it has gotten even tighter. So I would expect higher transaction levels for this cargo," a Singapore-based Western trader said.
Prior to the sale of the A961 parcels, Aramco had sold unusually high volumes of straight-run A960 fuel oil cargoes -- 11 or a record of almost 1 million tonnes -- between mid-March and end-May, when the unit first went down.
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