Two Saudi Arabia fuel oil cargoes, both for October loading, were sold at strong price levels for a second time in a week, amid severely tight supplies of on-specification cargoes, traders said.
Both the East Asian and Middle East markets were tight, as they have been for nearly a month, mainly due to large exports of high-density, high-viscosity cargoes from the Caribbean resulting in severe quality imbalances.
Saudi Aramco sold the 90,000-tonne parcel of 180-centistoke (cst) and 0.96-0.97 density, for October 17-19 loading from Ras Tanura, to Vitol at a premium of $13-$14 a tonne to Singapore spot quotes on a free-on-board (FOB) basis, up from $10-$11 previously and the highest price level in more than six years.
Vitol, which also bought the previous offering for October 8-10 lifting, was seen booking the 80,000-tonne Messaied to lift and deliver the cargo to Singapore.
ExxonMobil sold the second high-viscosity 700-cst parcel of about the same size, for October 29-31 loading from its joint venture Samref refinery in Yanbu, to Bakri at a discount of $13-$15 a tonne to spot quotes, FOB, steady to its previous deal.
Since September, only a single 90,000-tonne parcel has landed in East Asia for each month, with the Vitol parcel expected for November arrival, down from monthly average volumes of 350,000-360,000 tonnes until August.
The tight market has also led to cargoes from India being sold at high levels, including the latest Indian Oil Corporation parcel, for October 26-28 loading from Chennai, that was sold to Westport at parity to a discount of $1 a tonne to spot quotes, FOB, its highest in more than six years.
The last three low-density 380-cst parcels, from Mangalore Refinery & Petrochemicals, all for October and November lifting, were also transacted at seven-month high premiums of $5.50-$7.50 a tonne to spot quotes, FOB.
India's Reliance Industries also bought an extra 600,000 barrels of crude from Saudi Aramco for October, a trade source said, soaking up some barrels Royal Dutch Shell didn't lift because of a fire at its Singapore refinery.
Reliance, owner of the world's biggest refining complex in the western state of Gujarat, bought additional volumes of Arab Light for lifting on October 26, the source said. It normally buys about 230,000-240,000 barrels per day of Saudi oil.
Shell Singapore cancelled the lifting of four million barrels of Saudi Arab Light crude for October loading after a fire forced the company to shut down its largest refinery.
The move to take in extra supplies for October may help Reliance cut oil processing costs as Saudi Arabia has raised the grade's export price for November to a record high.
'Their official selling price is so high, it's not economical to request for more barrels for November,' a trader with a Southeast Asian refiner said.
