Mideast crude hits multi-month highs on robust Chinaoil demand

The strong demand on oil came on the back of a four-month slide in global prices which saw Brent touching a four-year low. (File photo: Shutterstock)

Spot differentials for Middle Eastern crude loading in December have hit multi-month highs on robust demand from Chinaoil.

Upper Zakum crude reached its highest for 11 months after Chinaoil bought a record volume of the Abu Dhabi crude and its strong demand for Oman pushed the grade to the highest premium in more than 2-1/2 months. The upward momentum has also lifted Qatari Al-Shaheen to a 4-month high.

Chinaoil, trading arm of PetroChina has snapped up 16.5 million barrels of crude so far this month on a trading platform operated by pricing agency Platts, traders said on Friday.

A record 18 Upper Zakum cargoes were delivered in the window, in addition to 14 Oman cargoes and one cargo of Dubai crude, they said.

"This record will never be beaten, not in my lifetime," a trader with a Western firm said.

The strong demand came on the back of a four-month slide in global oil prices which saw Brent touching a four-year low on Thursday.

Cash Dubai strengthened with the first three months in backwardation. In a backwardated market, the front-month price is higher than those in future months indicating strong demand for prompt supply.

"It's a distorted market," a trader with a North Asian firm said, as lower refining margins could reduce crude demand.

Prices of oil products, such as diesel and naphtha, which are oversupplied in Asia, have lagged gains in Dubai. Complex refining margins at a Singapore refinery averaged at $4.41 a barrel in the last five days, down from $6.35 in September, Reuters data showed.

Outside the window, Upper Zakum has been traded at a premium of $1 a barrel to its official selling price (OSP), traders said. This is the highest premium since November 2013, according to Reuters data.

Qatar has sold six cargoes of al-Shaheen crude via a tender at 56 cents a barrel below Dubai quotes on average, the narrowest discount in four months, according to traders and Reuters data. At least one cargo was sold at a premium, they said.

Buyers included TonenGeneral, ExxonMobil, Chevron and Vitol, traders said.
 

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Last Update: Wednesday, 20 May 2020 KSA 13:54 - GMT 10:54
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