SINGAPORE: Middle East crude benchmarks held steady on firm demand from Shell, but spot discounts for medium grades widened further on low demand in Asia.
An Indian refiner has recently bought an August-loading cargo of Qatar Marine at a discount wider than 40 cents a barrel to its OSP, down from earlier trades at a single-digit discount, traders said.
Taiwanese refiner CPC bought just one Upper Zakum cargo from ExxonMobil at about 15 cents below its OSP in its tender for August, they said. The market had expected the refiner to buy at least two cargoes this month.
MARGINS: Singapore refining margins, the benchmark for profitability among oil processors in Asia, fell to their lowest in two years, dragged down by lower gasoline margins as refiners have ramped up output after completing maintenance and as China stepped up exports.
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Margins at a typical complex refinery in Singapore dropped to $4.28 a barrel at the market close on Monday, the lowest since August 2016, according to Thomson Reuters data. Among oil products, gasoline margins fell the most, dropping by half in the past month to under $5 a barrel.
“Refineries in the region have been processing lighter crude as the margins for naphtha and gasoline have been quite good up until recently,” said a Singapore-based crude oil trader.
“So (the drop in margin) may mean a switch in crude or yield again, but it will take a while to take effect. The (refining) margins are getting very compressed now.”
Source: Brecorder
