Pakistan State Oil (PSO) has bought 100,000 tonnes of low-sulphur fuel oil for December, a fifth of their tender requirements, adding to the demand gloom in the market, traders said on Wednesday. The cargoes of 120-centistoke were awarded to Middle Eastern trader FAL Oil at a premium of $177.00 a tonne to Middle East 180-centistoke quotes, on a cost-and-freight (C&F) Karachi basis, they said.
PSO purchased in a previous tender 300,000 tonnes of low-sulphur fuel oil for August to October delivery. "Oil prices are falling. Why lock in purchases at high premiums?" said one trader, familiar with the tender. Electricity demand is rising in Pakistan due to limited alternative sources such as hydropower but with weakening oil prices, PSO held off further imports.
Thin Pakistani demand further undermined the market, already saddled with record-high fuel oil inflows from the West that totalled 3.7 million tonnes this month. Singapore fuel oil crack against Dubai crude plunged to a discount of $14.30 a barrel, nearly treble the discount of $5.12 a barrel seen a month ago.