Refinery outages give a push to gasoil in Mideast

Gasoil premiums held firm in the Middle East, supported by refinery shutdowns in the region and Asia, while naphtha was firm and fuel oil recovered from a three-week slide.

"Very tight and strong market ... There is no gasoil coming from the East towards the Middle East. The Middle East itself is tight, with (Saudi) Aramco imports," said one trader.

However, a second trader considered the market as balanced in general terms despite seeing some tightness in the low-sulphur gasoil known as 500 ppm.

"There is no abrupt demand which supply does not cover," he added.

One trader said India's Reliance was offering $5.50 a barrel for 10 ppm, also known as ultra-low sulphur gasoil.

He pegged premiums at $4.75 a barrel for 500 ppm; $2 a barrel for 0.2 per cent gasoil; $1.75 a barrel for 0.5 per cent gasoil and $1.75 a barrel for jet fuel.

Another trader pegged 500 ppm gasoil at $3.5-$4 a barrel; 0.2 per cent gasoil at $1-$1.15 a barrel and 0.5 per cent gasoil around $1 a barrel.

A massive earthquake in Japan continues to impact the product as well as refinery shutdowns in Indonesia and Vietnam, which have added to tightening, said one trader.

Kuwait earlier this month shut its Shuaiba refinery for maintenance work expected to last for 45 days, and Bahrain's Bapco refinery has started to gradually resume operations after a planned turnaround, traders said.

"The East and the Middle East are still long (on gasoline). The values against naphtha have widened a lot," said one trader.

He pegged premiums for 95-octane gasoline at $80s-$90s over the Middle East benchmark naphtha quotes on the back of a strong gasoline market in the West.

"No activities," he said and added that Aramco wanted to buy at least 2-3 cargoes for May-June but cancelled the tender after failing to secure good premiums.

As for naphtha, the trader said the market remained firm, but another trader said uncertainty persists about the recovery of Japan's refining sector, which has been hit by the devastating quake.

"This might cause the market to become tight, but still we are waiting to hear more about how badly products production has been hit in Japan," said the second trader.

Demand for marine fuels from Fujairah, the world's second-largest bunkering port, has been poor due to high fixed-price levels and high premiums for vessels due to the unrest in the region.

"Due to higher geopolitical risk premiums for ships have gone up which created a tighter fuel oil market," said one gulf-based trader.

Premiums in the Middle East, reflected by the Fujairah marine fuels market, have weakened significantly over the past week, with bunker prices at the UAE port at $1.50 a tonne below Singapore levels falling from premiums of above $10.00 a tonne in February, Reuters data show.

"About three weeks ago the market saw a steep drop and recovered a week ago; supplies are there and (are) more than what is needed," a second trader said.

Despite the poor Fujairah market, April-loading export volumes from Saudi Arabia has been thin, with only three cargoes, totalling 270,000 tonnes, sold or offered so far, including the current parcel, mainly due to planned turnarounds in the kingdom.