Pakistan State Oil has bought up to 520,000 tonnes of high-sulphur fuel oil for October-January delivery at higher prices due to a tightening market, traders said on Thursday.
The eight 125-180-centistoke (cst) cargoes, of 55,000-65,000 tonnes each, were purchased from Middle East trader Bakri at premiums of $19-$24 a tonne to Middle East spot quotes, on a cost-and-freight (C&F) Karachi basis.
The first four parcels are on a firm basis, for delivery on October 27-29, November 5-7, November 13-15 and an unspecified date in December, while the remaining four are on an optional basis. PSO last awarded a tender for eight similar cargoes, for delivery on September-November, at premiums of $17-$22 a tonne to Middle East spot quotes, C&F.
"Prices are higher this time round because the East Asian market has gotten tighter and that has drawn some supplies away from the Middle East," a Singapore-based Middle East trader said. Import volumes for the fourth quarter have eased as Pakistan enters the end-of-year rainy season, brought by the south-west monsoon, that will see more hydropower capacity replacing fuel oil-generated power. However, in the longer term, the country's fuel oil import volumes are expected to increase as most of its new power plants are oil-fired thermal units.
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