Strong demand from Asian refiners amid healthy distillate cracks and expected implementations of OPEC production cuts have propped up cash differentials of Middle Eastern medium heavy sour crude for March loading, traders said late last week.
Spot cargoes of March-loading Qatar Marine crude were heard sold at premiums ranging between 10 cents/b and 20 cents/b to the grade's official selling price, traders said. They added that all spot cargoes for March loading could have been sold.
"All [Qatar Marine] cargoes [for March loading] are gone," said a North Asian crude trader.
Apart from Qatar Marine, March-loading Upper Zakum crude cargoes were heard to have changed hands at premiums of between 20 cents/b and 25 cents/b to the grade's OSP.
Inpex and ExxonMobil were heard to have sold a cargo each to Shell, while some cargoes could have been placed to Japanese end-users, traders said.
Two March-loading Dubai crude cargoes were also heard to have been placed at premiums of around 20 cents/b to Dubai crude, traders said. Further information on the trades remained unclear.
Traders indicated that strong cracks for heavy and middle distillates and expected cuts to supply are supporting sentiment for the medium, heavy grades.
Second-month 180 CST and 380 CST high sulfur fuel oil to Dubai crude swap cracks averaged minus $2.15/b and minus $3.02/b respectively in January to date, the highest since July and June 2012 when they averaged at minus $1.83/b and minus $2.25/b respectively, S&P Global Platts data showed.
Second-month gasoil and jet fuel to Dubai crude swap cracks, meanwhile, averaged $11.75/b and $12.48/b respectively in January to date, hovering close to the 11-month highs of $12.37/b and $13.02/b in October respectively, the data showed.
Meanwhile, traders continue to await the issuance of Qatar Petroleum's Al-Shaheen crude tender. Starting from January, QP would undertake all of Qatar's crude and condensate sales process previously conducted by state-owned petroleum and petrochemicals marketing company Tasweeq, following the successful integration of the trading arm into the national oil company, QP said in an email notice earlier this month.
Last month, Tasweeq was heard to have sold five cargoes of Al-Shaheen crude for loading over February 1-2, February 3-4, February 12-13, February 25-26 and February 26-27 at discounts of around 20-30 cents/b to Platts front-month Dubai assessments, traders said.
Traders are also awaiting the outcome of Bahrain Petroleum Co.'s tender offering March-loading Banoco Arab Medium which closed on Friday. Traders indicated that there were no tenders from Bapco for February loading Banoco Arab Medium last month because of additional demand from term buyers.
It was last heard to have sold a January loading cargo of the crude, via tender, to a western trading house at a premium of around 5 cents/b to Saudi Aramco's OSP for Arab Medium.
Meanwhile, traders said they expected Middle Eastern light sour crude grades to remain under pressure for March loading.
"[Because of the narrow EFS] arbitrage cargoes [coming to Asia will] mostly [affect demand for] the lighter grades ... Middle East light sour grades are under pressure," said an East Asian crude trader.
Second-month Brent/Dubai Exchange of Futures for Swaps -- which enables holders of ICE Brent futures to exchange a Brent futures position for a Dubai crude swap -- was assessed at $1.65/b on Friday.
The second-month EFS averaged $1.81/b in January to date, compared with $2.17/b in December, Platts data showed.
