Pakistan State Oil bought less than half its total oil requirements for September to December delivery, skipping gasoil and low sulphur fuel oil purchases because of a dip in demand, industry sources said on Monday. The state-owned company bought 260,000 tonnes of high sulphur fuel oil from Bakri Trading and Vitol at premiums of about $25 to $26 a tonne above Middle East quotes.
It also bought 280,000 tonnes of 87-octane gasoline from Gunvor, Trafigura, Total, Oman Trading and Gulf Petrochem at premiums of $93-$106 a tonne. It had initially required 305,000 tonnes of gasoil, up to 520,000 tonnes of high sulphur fuel oil, 165,000 tonnes of low sulphur fuel oil and 315,000 tonnes of gasoline.
PSO decided to not buy gasoil because of high offers and a dip in domestic demand due to increased rainfall, which has boosted hydropower generation, industry sources said. The company also received two term cargoes from its long term supplier Kuwait Petroleum Corp (KPC) for September and October and a spot cargo it recently purchased from Vitol for late August, which was sufficient to meet demand, one of the sources familiar with the matter said.
"With the increased rainfall, the diesel demand has dropped, so there was no need to buy spot, especially at such high numbers," the source added. PSO also decided not to buy low sulphur fuel oil due to sufficient stocks and as the company prepares to shift to winter-grade from November.
It might issue a separate tender to buy the product to meet winter specifications, the source said. Gasoline stocks in the country are now quite low as demand is still steady, but it was not economical for PSO to buy the better quality 92-octane cargo, industry sources said. The company instead bought all the cargoes it sought for 87-octane gasoline.