Mideast Gulf oil outlook - India holds the key .
DUBAI 1996-08-29
India will continue to hold the key to the middle distillates product market in the Middle East Gulf in the short term , traders in the region said on Thursday .
They said premiums on high quality jet kerosene have widened to around $ 1 , and are likely to remain strong in the near term .
" On the jet kerosene side we must be cautious about quality .
Some are commanding a very good premium of 95 cents to one dollar .
It 's been 99 cents to Korea .
This will stay at this sort of price premium for a while , " one said .
" But for normal jet the weakened demand is quite noticeable , the premium is around 45-50 cents .
The differential is not normally as wide as this , " he added .
Another put the premium for jet kerosene at between 65 and 75 cents .
One trader said despite the fact that some kerosene was in storage at Dubai ports , demand looked to exceed supply in the near term .
Jet kerosene was assessed at $ 27.40 - $ 27.70 a barrel fob Gulf on Thursday , up from $ 27.22 last week .
Dealers expected premiums to stick around current levels for the next two or three weeks , before they get a boost in the second half of September from demand for October cargoes .
Gas oil , assessed at $ 24.00 - $ 24.20 a barrel fob Gulf , was little changed on Thursday from last week 's $ 24.10 - $ 24.24 .
" On gas oil , in the near term demand and supply are balanced to a bit short , there are some enquiries into east Africa and short covering in India , " said one trader .
" The Indians have awarded three cargoes , but the question is whether they will come out for more , " he added .
India has acquired 120,000 tonnes of diesel in three cargoes , bound for the west coast , in its October tender .
Traders said the award could be India 's lowest in recent years .
" After IOC 's very small purchase of 120,000 tonnes , I 'm still suspicious that they will buy more in the second half of October , " another said .
But traders see the market remaining tight in the short-term , with some surplus arising closer to October .
" I see an overhang of gas oil further out , " one said .
" Gas oil will remain tight in the short term up to mid-September with the premium of around $ 1 for 0.5 percent ( sulphur material ) .
In the second half of September and October we see the premium coming off to 70-75 cents . "
Traders said there was not much demand for one percent sulphur material gas oil , with the premium at 40 to 45 cents .