Asian refiners are snapping up Middle Eastern and Russian crudes priced on the comparatively cheaper Dubai marker, shunning Brent-linked Atlantic Basin grades that have become too expensive as the European benchmark strengthens.
Brent's premium to Dubai rose above $5 a barrel this week, the highest since March, and that combined with strong Asian demand has pushed premiums for Russian, United Arab Emirates and Qatari grades to multi-month highs.
Seasonal demand and a recovery in margins, or profits from processing a barrel of crude into products, are also making Asian refiners ramp up runs, amplifying their call for crude.
“Light grades are popular this month, and that in partex plains the strong premiums these grades are fetching,” said a Singapore-based trader with an Asian firm.
Asia's demand for light crudes that yield more naphtha, gasoline and diesel, pushed up Russian Sokol's spot premium in September to a four-month high. Grades from United Arab Emirates and Qatar also traded at premiums for the first time in months.
Abu Dhabi's benchmark Murban last traded at a premium of more than 60 cents a barrel to its official selling price for September, the highest for at least this year, according to Reuters data. That's a sharp rebound from a month earlier when Murban sold for as low as 70 cents a barrel discount to its OSP.
The switch from a discount to a premium also came after Abu Dhabi National Oil Company (ADNOC) cut its OSPs, while a 30percent fall in Russian light sweet crude exports in September has supported prices as well.
Refining margins, or processing profits, have averaged $9.83a barrel over the past five days, the highest since the $10.49level touched in February.

Asia refiners target Dubai-priced Mideast, Russian crudes

Seasonal demand and a recovery in margins, or profits from processing a barrel of crude into products, are also making Asian refiners ramp up runs, amplifying their call for crude. (File Photo: Reuters)
Singapore, Reuters
Thursday 18 July 2013
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