Middle East gas oil prices fell this week on swelling global inventories and weak demand, with traders concerned the market could soften more as the refinery maintenance season in the West comes to an end.

Benchmark gas oil differentials fell about 20 cents to a premium of $1.80 a barrel versus levels seen last week, as traders started to ship cargoes into the region.

Around 60,000 tonnes of diesel was booked to move to the Middle East from South Korea, shipbrokers said earlier this week. The cargo was loaded on April 18 on the Elegant Victoria.

“Demand in the region is still relatively healthy, but the global supply picture is just too bearish,” an Asian-based trader said.

“This is throwing a wet blanket over any positive demand-side news in the region.” The Asian gas oil contango widened further this week after Indian oil companies slowed down a recent buying spree.

Indian Oil Corp (IOC) and Hindustan Petroleum Corp decided to scrap their outstanding diesel import tenders, after Reliance announced it would start supplying fuel for the domestic market.

“The Indians cancelled a few import tenders this week, thanks to Reliance, so now people are to have to look at a new outlet for supplies in Asia,” a Singapore based trader said.

“It’s getting tougher to get value on cargoes, so now we have to explore all options.” Earlier this week French oil refiner Total estimated there was about 30 million barrels of refined fuel products on floating storage globally.

Middle East petrol differentials fell, with expectations that Saudi Arabia and Iran were expected to keep their import programmes steady next month. Benchmark petrol premiums were valued at around 50 cents, down nearly $1.50 from levels seen last week.

“The market is relatively balanced, the refineries in Saudi Arabia are coming off maintenance next month so the demand side should be stable,” a trader said.

Middle East fuel oil prices eased 20 cents to $4.80 a tonne this week, as Saudi Arabia continued to offer spot barrels for May loading cargoes. The world’s top oil exporter was expected to halt spot cargo sales in June as it brings back online refining units currently undergoing maintenance, traders said.

Fuel oil’s value versus Dubai crude strengthened as much as 15 percent to minus $3.90 a barrel — the highest level since February 24. Fuel oil shipments from Europe will drop by up to 20 percent in May versus April, as Europe refiners slash operating rates due to poor margins.

“Fuel oil is leading the barrel now, we are at a point where the bottom end is showing good value, better than the top half,” a trader said.

Meanwhile, industry sources said that Saudi Arabia would pump about the same amount of crude in May as in April. “They are not cutting output overall,” one senior oil executive said. “It is about the same.” Supply has been steady since February at just under 8 million barrels per day (b/d), sources said.

State oil firm Aramco has told some refiners in Asia and Europe they would receive lower supplies than in April, with the possible implication the kingdom was reducing exports ahead of an OPEC meeting on May 28.

But the supply fall to some was likely to be just fine-tuning previous cuts, sources said. Other customers could get more oil and the changes would have more to do with management of oilfields than anything else, one source said.

Some customers would see cuts as output of different types of crude vary as facilities were taken offline or as Aramco takes advantage of slower demand to do maintenance, he said.

Saudi Arabia has cut output by around 2 million barrels from a peak of around 9.7 million b/d last summer as recession has cut demand for fuel. The Saudi cuts alone add up to more oil than is produced by fellow OPEC member Nigeria.

The kingdom has shouldered the bulk of the 4.2m b/d of cuts agreed by the Org