Saudi Aramco sells early Jubail cargo at discount

Saudi Aramco has sold 80,000 tonnes of 380-centistoke (cst) fuel oil for early-August loading from Jubail at a much smaller discount versus earlier deals, traders said on Thursday.

Aramco sold the cargo for August. 9 loading to an unknown party at near parity to Singapore spot quotes, on a free-on-board (FOB) basis, traders said.

"The parcel was sold at a small discount, and will be staying in the AG (Arab Gulf region)," said a fuel oil trader.

Aramco last sold 80,000 tonnes of cracked 380-cst fuel oil for July 27 loading from Jubail to Shell at a discount of $4.50 per tonne to Singapore spot quotes, FOB.

This compared with a discount of $4.00-$4.80 per tonne to Singapore spot quotes, FOB, that Singapore trader Hin Leong paid for a Jubail parcel that loaded on June 6, which reflected a narrower discount to previous trades.

Aramco is also offering an A962 cargo loading from Rabigh on Aug. 9. Bids for this A962 parcel are expected by Thursday, with a one-day validity.

The state oil firm last sold an A962 cargo for July 20-21 loading from Rabigh to French major Total at a lower discount compared to earlier deals.

Total paid a discount of $1-$2 per tonne to Singapore spot quotes, on a free-on-board (FOB) basis, for the cargo -- the third A962 parcel it bought from Aramco in the last five months.

Aramco's increased fuel oil exports come at a time when Asian fuel oil fundamentals are strengthening.

The market, which is taking a breather after surging over the last few weeks, is supported by expectations that supplies will remain tight for the rest of the year on reduced refinery runs, a spillover from the firm Middle East market, and steady demand from the Asian marine fuels sector, the product's largest outlet.

Reflecting the strong fundamentals, the product's front four timespreads along the forward curve -- August/September, September/October, October/November and November/December -- remain in steep backwardation.