Saudis To End Spot Fuel Oil Sales Once Peak Demand Ends This Summer - Economic Times

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SINGAPORE: Saudi Aramco won't sell any spot fuel oil after its peak summer demand season, on rising requirements from domestic utilities and new secondary refining units, traders said on Tuesday. Saudi Arabia's state oil firm, which typically offers at least two 80,000 tonne parcels of fuel oil onto the spot export market monthly outside the summer period, will absorb these parcels for its domestic market.

This could further tighten the fuel oil crack against Dubai crude, which has halved since the start of the month on prospects of smaller flows from the West. "We are hearing that they will not be offering the usual one or two cargoes in the spot market because of growing domestic demand from the power sector," a Singapore-based fuel oil trader said.

As Middle East oil-producing economies surge, their demand for utility fuel used by industries has ballooned. Demand for electricity across the Gulf Cooperation Council (GCC) is growing at an annual rate of around 8 percent. Gas projects have failed to keep up with demand for electricity production.

Apart from Qatar, all Gulf states are short of gas. Traders said they were still uncertain how long the halt on fuel oil exports would last. But most said they were planning for it to run through the end of the year at least. "We don't have a sense if this is going to go beyond December but we will plan for it," a trader said. Aramco, the largest fuel oil exporter from the Middle East into East Asia, usually offers the 380-centistoke (cst) grade fuel oil parcel from its joint-venture refinery in Jubail or the 180-centistoke (cst) lot from its Ras Tanura oil processing facility into the spot market.

EDIT

http://economictimes.indiatimes.com/International_Business/Saudi_Arabia_to_keep_fuel_oil_exports_on_ice_after_summer/articleshow/3301878.cms