Aramco, Exxon sell oil at discounts

Saudi Aramco and Exxon Mobil have sold two parcels of high-viscosity fuel oil for early-December lifting from the Red Sea port of Yanbu at wider discounts in a weaker market, traders said yesterday.

Aramco sold to Cargill 85,000 tonnes of 650-centistoke (cst) fuel oil for December 3-5 loading from its joint venture Samref refinery with Exxon at $23-$24 per tonne below Singapore spot quotes, on a free-on-board (FOB) basis.

Exxon sold a similar 80,000-to-90,000-tonne parcel for December 8-10 lifting from the same port to Middle East trader FAL Oil at an undisclosed price. Traders said the deal could have been done at a wider discount of around $30 per tonne, FOB.

These levels transacted are much lower than the $15-$16 per tonne below Singapore spot quotes, FOB, that local trader Kuo Oil paid for a cargo loading on November 10-12.

Asian fuel oil fundamentals have softened over the last one to two months, as rising supplies from the Middle East and the West outpaced steady regional bunker demand.

Saudi Arabia has sold at least 500,000 tonnes of November-loading spot cargoes so far, after exporting more than one million tonnes in October.

Western arbitrage flows of around 3.5 million tonnes for November have also weighed on the market, while December volumes are expected to edge higher.

The product's timespreads remain deep in contango along its 12-month forward curve, while physical differentials are mired in the red at discounts of $3-4 a tonne, compared to premiums of $2-2.50 a tonne in early October.

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