Diesel slips on swelling global stocks
Singapore, January 7, 2010
Middle East diesel prices eased this week, shedding gains from the late year-end rally in 2009, as bulging global inventories continue to weigh on the market.
Benchmark prices in the region were pegged at around 15 cents, down 35 cents from mid-December, traders said.
"I think there was a bit of optimism that Iran would be looking to stockpile through March, following their purchase from Hin Leong last month," an Asia-based trader said.
"But they seem to have gone quiet, and there has been no indication they are on the market to buy large volumes."
Iran bought about 2 million barrels of gas oil (diesel) from Singapore trader Hin Leong for December delivery.
Iran resumed diesel imports in September as it prepared to meet winter heating demand.
The Islamic Republic has been buying about 400,000-600,000 barrels each month since September, traders said.
Fuel oil prices firmed this week as regional supplies tightened due to strong domestic requirements over the winter period and thinner Western arbitrage supplies into Asia.
Fuel oil's prompt February crack was valued at a discount of $3 a barrel to benchmark Dubai crude, versus the minus $2-$3 range seen towards the end of December.
"The market is still relatively strong; supply sources in the Middle East are tight now because of the winter," a trader said.
"The arbitrage flows into Asia are also lower than the last few months, so all that is going to play in keeping the market supported,” he added. – TradeArabia News Service