RTRS:Middle East Crude-Strong margins offset Shell cancellations
SINGAPORE, Oct 3 (Reuters) - Middle East crude was supported
by expectations that robust demand would endure amid profitable
refining margins, offsetting the dampening effect of Shell's
cancellation of Saudi crude imports into Singapore in October.
Shell Singapore has cancelled lifting of four million
barrels of Saudi Arab Light crude for loading in October, said
three trading sources with knowledge of the situation, after a
fire forced the company last week to shut down its largest
refinery, with a capacity of 500,000 barrels per day (bpd).
"Differentials for regional grades where surprisingly
unaffected though, which would suggest that booming demand from
the region is more than sufficient to mop up any excess volumes
freed up by the shut-in," said David Wech from JBC Energy
consultancy.
"The easiness for Saudi Aramco to take barrels off the
market - following its unilateral move to lift output to a
30-year high - is a key factor why one should not get too
bearish on crude."
Traders pointed to the fact that Arab Light is not very
competitive against other Middle East grades, which would force
Saudi Aramco to either store the barrels or simply not produce
them. Saudi grades are not traded on the spot market.
"I believe the market will balance itself out," said a
trader with a northeast Asian trading firm. "Unless margins
weaken and demand weakens."
In the case of the Abu Dhabi National Oil Co., Shell has not
requested to cancel any crude shipments to its Singapore
refinery, an ADNOC source said on Monday.
Abu Dhabi's flagship Murban crude was more competitive than
Arab Light, which implies it could be sent to Europe to clear
any surplus, even within Shell's own system.
Oman crude for December was valued at a premium of about $2
a barrel to Dubai quotes, traders said, maintaining the hefty
premiums seen at the end of the previous trading month.
Participants also awaited official selling prices (OSPs)
from the region's top producers for indication of of market
direction.
* DME OMAN
- December Oman traded on the DME was at a $1.49-a-barrel
premium to Dubai swap quotes at 0830 GMT, using the settlement
price for DME futures, the ICE one-minute marker for Singapore
and the Brent-Dubai EFS as calculated by Reuters.
- The November contract on Friday was at a premium of more
than $6 to Dubai quotes before it went off the board at the end
of the trading day. Prices generally become more volatile and
sometimes differ more for physical valuations during expiry.
* EAST-WEST
- The Brent-Dubai Exchange of Futures for Swaps (EFS)
widened by 65 cents to $5.35 a barrel as pressure grew on values
of heavy sour grades from the Mideast Gulf that compete with
Arab Light, relative to Atlantic basin light sweet crude.
But it eased back to $4.90 a barrel by 1630 Singapore time
(0820 GMT), 20 cents above Friday's value.
- Libya's civil war and a halt in the country's oil exports
of about 1.3 million barrels per day (bpd) sent the front-month
EFS to $9.20 on June 15, the highest intraday value since the
spread reached a record of almost $12 in October 2004.
* MARKET NEWS
- Shell has already begun winding down operations at its
Singapore chemical complex because it cannot supply feedstock
from the adjacent 500,000 barrels-a-day refinery, and has said
it can't meet supply commitments on naphtha and monoethylene
glycol -- an input in making textiles -- for October.
- A pipeline in Nigeria's onshore Niger Delta owned by
Italian energy group Eni has been damaged, local
industry sources and witnesses said, but the company said it
planned no force majeure and aimed to repair the pipeline
quickly.
- Qatari liquefied natural gas (LNG) producer Rasgas plans
seven LNG plant maintenance shutdowns in 2012, a company
official said on Monday.
- "The first will be in January. We will also shut AKG 2 (Al
Khaleej gas two) in March. Trains 1 and 2 will be shut in May
and Train 7 will be down in October," he told Reuters at a
conference in Qatari capital Doha.
CRACK SPREADS
- Fuel oil's October crack narrowed 66 cents to a discount
of $2.42 a barrel to Dubai crude, while the November discount
was 75 cents stronger at $2.77.
- Gas oil's October crack held steady at a premium of
$18.18, up 3 cents, while the November premium was unchanged at
$17.83 a barrel to Dubai crude.
- Naphtha's October crack weakened 63 cents to a discount of
$5.62 a barrel, while the November discount was 43 cents weaker
at $4.41.
* OUTRIGHT PRICES
- October ICE Brent LCOc1 was at $101.69 a barrel at 0830
GMT, down $2.46 from Friday.
