DUBAI: Middle East gasoline prices weakened this week weighed down by poor demand from Saudi Arabia and Iran, the region’s top consumers of the motor fuel, traders said on Thursday.
Benchmark prices in the region were pegged at around Middle East naphtha plus $47 traders said. Levels were about $20 to $30 below levels seen in October.
“We feel the market is in a plus or minus $5 range of the last deal done level,” a trader said.
Traders do not anticipate the market to move much higher as they expect to see demand remain fairly stable through March 2010.
Iran’s December gasoline imports fell by as much as 40 percent to 59,633 barrels per day. November imports were pegged at around 102,000 bpd.
It was still unclear why Iran had cut back on its purchases from the spot market, although traders said that Tehran continues to struggle to raise the funds needed to pay for their monthly domestic motor fuel requirements.
“They are definitely having cashflow problems which is one of the reasons they are buying fewer cargoes,” a trader said.
Iran will require an additional $3 billion to import gasoline until the end of March 2010.
Also, Saudi Arabia halted gasoline imports this month due to flat demand and higher domestic production, traders said.
The world’s top oil exporter is also mulling the option of selling as much as 500,000 barrels of gasoline in January through private negotiations, traders said.
“They want to buy the low octane gasoline and sell the higher octane stuff coming out of their refinery, but they will look at the price they can get of course,” a trader said.
Saudi Aramco was expecting to seek a price level of Middle East naphtha plus $60 to $65 before offering those barrels on the spot market.
Meanwhile, Middle East fuel oil prices edged higher this week and are expected to continue climb in anticipation that supplies will tighten due to upcoming maintenance and the onset of winter.
January’s fuel oil cracks strengthened to minus $1.89 a barrel in Asian trade, reflecting the strength of the market over the next few months.
“We are going to see lower Western arbitrage flows into Asia, and there will thinner supply outflows from the Middle East because of winter and maintenance,” a trader said.
“This will keep the market supported and we could possibly see the cracks improve further.”
Middle East fuel oil sales to Asia for January hit 180,000 tons, down from December which was pegged at about 800,000 tons.
The latest Middle East cargo on offer is ExxonMobil’s 80,000-90,000 tons of high viscosity 650-centistoke (cst), for loading Jan. 6-8 from its joint-venture Samref refinery in Yanbu, on a free-on-board (FOB) basis.
Offers for the cargo are expected by late Thursday and a deal is expected a day later.
Kuwait Petroleum Co. also sold 80,000 tons of super-cracked 380-cst, for end-January loading, to an undisclosed buyer at a discount of $23.00 a ton to Singapore spot quotes.
