Bloomberg News

Middle East Oil Premiums Rise for Fourth Day on Profit Gains

October 17, 2011

Oct. 17 (Bloomberg) -- Premiums for Middle East oil for sale to Asia rose for a fourth day as increased refining profits spurred demand.

Qatar Marine for loading in December climbed 11 cents to a premium of 44 cents to its official selling price, according to data compiled by Bloomberg. Murban, produced by Abu Dhabi National Oil Co., gained 3 cents to a premium of 20 cents.

Refinery demand is increasing as plants expand processing runs to take advantage of more positive margins. Gasoil’s premium to Dubai crude averaged $16 a barrel in the week to Oct. 14, up from $13.39 a year earlier, data from PVM Oil Associates Ltd., a London-based brokerage, show. Fuel oil’s discount to the Middle East benchmark narrowed to $4.54 today, according to PVM.

“We expect solid demand and the favorable fuel oil crack to continue to prop up Middle Eastern grades in the coming weeks,” said JBC Energy GmbH in its weekly Asian Report.

Dubai swaps for November narrowed to a premium of $1.73 a barrel today compared with January after reaching $1.88 on Oct. 14, according to data from PVM. This market situation known as backwardation suggests demand is greater for immediate shipments.

Oman crude for immediate loading increased $1.43, or 1.4 percent, to $107.67 a barrel, Bloomberg data showed. Dubai oil for loading in December rose 1.4 percent to $107.24. Murban for spot delivery climbed 1.4 percent to $112.03.

Oman futures for December delivery rose 50 cents to $109.50 a barrel on the Dubai Mercantile Exchange at 5:10 p.m. Singapore time with 1,394 contracts traded. The settlement price was $110.03 at 12:30 p.m. in Dubai.

The December Brent-Dubai exchange for swaps, which measures the European marker contract against the Persian Gulf grade, narrowed $1.25 to $5.85 a barrel, said PVM. The exchange for swaps for January fell $1.04 to $4.94.

--Editor: Ryan Woo.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net.


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