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Singapore: Abu Dhabi's flagship Murban crude has traded at its lowest differential in nearly four years, as demand for the middle distillate-rich crude shrank on low gas oil cracks and refinery run cuts, traders said on Tuesday.
Japanese trader Mitsui bought a 500,000-barrel cargo of October-loading Murban at a discount of $1.50-$1.70 a barrel to the Abu Dhabi National Oil Company (Adnoc) official price, as an overhang of October cargoes pressured the grade's price, traders said.
The last time Murban crude traded at such a deep discount was in December 2004, when struggling January cargoes traded at discounts as steep as $1.50 due to low kerosene demand in Japan, the main buyer of Abu Dhabi crude.
This year, it is slowing demand after oil prices rose to a record near $150 a barrel in mid-July and a weakening gas oil crack that have pushed differentials lower.
The gas oil crack has nearly halved since late-May to stand at around $24.45 above Dubai swaps yesterday, on ample diesel supplies worldwide.
High prices and falling refining margins have also prompted refiners to start cutting runs in Asia.
Adding pressure, the weather in Japan is forecast to be warmer-than-average from September to November, the Japan Meteorological Agency said late last month, limiting demand for kerosene.
Adnoc took notice of the falling demand and cut Murban's premium to benchmark Dubai quotes to $4.64 a barrel last week, the grade's lowest premium in a year, when it issued its retroactive official selling price (OSP) for August.
Adding pressure, the weather in Japan is forecast to be warmer than average from September to November,the Japan Meteorological Agency said late last month, limiting demandfor kerosene.
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