Asia Crude Outlook-Pressured by weaker demand
Reuters, Monday, April 13, 1998 at 02:29
By Azlin Ahmad
SINGAPORE, April 13 (Reuters) - The Asian crude market is
expected to be under pressure on ample supplies this week, as
refinery shutdowns for maintenance cut demand even as Indonesia
and China reduce oil production, traders said on Monday.
"The output cutbacks may in the mid to longer term help
stabilise heavy regional crude prices, but there is still a fair
bit of supply around right now," said a trader with a major oil
company.
"Bach Ho barrels are having difficulty finding buyers," he
added.
China and Indonesia separately announced earlier this month
they would cut crude output by a combined 220,000
barrels-per-day (bpd) starting April. But this has not put a
dent on the oversupplied crude market in Asia.
With Asian refiners going to deeper maintenance shutdowns in
May, the fall in demand is likely to more than offset the
reduction in crude oil supplies, traders said.
Some North Asian refiners, especially Japan, start their
yearly maintenance turnarounds in April, but the bulk of the
shutdowns will be carried out in May and June, traders said.
The bearish market was evident by the lack of buying
interest in heavy sweet Vietnamesese Bach Ho crude, they said.
Vietnam closed its tender to sell 440-550,000 barrels of
Bach Ho loading April 18-30 last week, but failed to make an
award because the bids were considered too low.
Bids submitted into the tender were at discounts of around
20 cents per barrel to the OSP, compared to earlier Bach Ho
trades done at around OSP less 10 cents for first half April
cargoes, traders said.
Vietnam said it expected to commit the supplies to its term
customers, but traders said few buyers would be willing to
absorb the barrels in light of the current lacklustre refinery
demand.
But Middle East crude prices are likely to be steady this
week, with demand seen adequate to soak up the remaining May
supplies of Oman and Abu Dhabi grades, traders said.
They said the latest retroactive official selling prices of
Oman crude, released last week were supportive, leading to
renewed buying for the crude.
Oman's set its March OSP at $11.31, a 17 cents per barrel
discount to benchmark Dubai and deeper than the seven cents
discount a month earlier.
Traders had said earlier the Oman OSP was overvalued and
needed to fall to attract buying interest.
"The latest Oman OSP was supportive, so the leftover May
barrels will maintain their spot premiums," said a trader with a
European major.
Offers for May Oman were at premiums of five to six cents to
the OSP, compared to trades done a week ago at premiums of three
cents.
-- Singapore Newsroom (65) 870-3082, Fax (65) 776-8112
-- Email: singapore.newsroom@reuters.com
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