Bloomberg News

ESPO Premiums Drop; Middle East Crude Timespreads Weaken

January 26, 2012

Jan. 26 (Bloomberg) -- Russia’s East Siberia Pacific Ocean oil sold at lower prices than last month, signaling weaker demand for crude from refiners.

Russia’s OAO Surgutneftegas sold ESPO cargoes for March loading at a premium of about $6 a barrel, down from as much as $7 for February shipments sold by Rosneft Oil Co. last month. TNK-BP sold a cargo last week for a premium of $6.30 a barrel.

Petro-Diamond, a subsidiary of Japan’s Mitsubishi Corp., bought four cargoes, and Russia’s Gunvor Ltd. picked up one.

Dubai crude’s backwardation, when the price for crude delivered now is greater than for later shipments, widened by 10 cents. Dubai swaps for February were 92 cents a barrel more than April, according to data from PVM Oil Associates Ltd., a London- based broker. The price difference, known as a timespread, has fallen 17 percent this year, implying weaker oil demand.

No Dubai partial deals were done today, according to a survey of traders who monitor the Platts pricing window. Bids and offers were off by 5 cents, with Arcadia Petroleum Ltd. trying to buy at $109.30 and Chinaoil selling at $109.35. Gazprom OAO tried to buy Minas at $119.55. There were no sellers.

Discounts of Abu Dhabi’s Murban crude and Qatar Marine remained unchanged at 36 cents and 78 cents below official selling prices, respectively, according to data compiled by Bloomberg. The spot price of Dubai rose 69 cents to $109.54 a barrel, according Bloomberg data.

The exchange for swaps for March, which gauges North Sea Brent crude’s premium over Dubai, was unchanged at $2.50 a barrel today.

The Singapore crack, which measures the profit of turning a barrel of Dubai into products such as diesel and gasoline, has averaged $6.72 a barrel this week, compared with a $4.45 average over the last three months, according to data compiled by Bloomberg.

Oman futures for March delivery rose 23 cents to $110.18 a barrel on the Dubai Mercantile Exchange at 5:36 p.m. Singapore time, with 1,182 contracts traded. The contract settled at $110.31 at 12:30 p.m. Dubai time.

--Editors: Paul Gordon, John Buckley

To contact the reporter on this story: Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net

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


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