Premiums for January ultra-light sweet regional crude rose to their highest in close to seven months as tighter spot supplies and firm refining margins for light distillates lifted bids. Papua New Guinea producer Oil Search sold its January 22-26 650,000-barrel cargo of Kutubu Light crude to BP at around $1.90 a barrel premium to dated Brent, although this could not be directly confirmed. In comparison, December-loading cargoes were traded at a premium in the low-$1.00 to dated Brent last month.
Offers for the cargo were initially pegged at mid-$2.00 a barrel to dated Brent before trading at a lower price, traders said. The deal level of close to $2 premium to the benchmark is at a multi-month high underpinned by strength in gasoline and naphtha refining margins, they added.
The January premium is also likely to have been supported by tighter spot availabilities despite no change in volumes for the January loading programme from the preceding month. Oil Search had marketed both December-loading Kutubu Light cargoes on the spot market last month, compared with just one cargo that the oil firm had in January. ExxonMobil, which has the other Kutubu Light cargo due for January 8-12 loading, tends to keep its allocations of the East Timor grade for its refining system. The oil major is offering 650,000 barrels of Indonesian Banyu Urip crude for January 15-19 loading. The tender closes on November 23.
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