Price differentials for Australia's North West Shelf condensate maintained an upbeat tone despite the large pool of ultra-light crude supply in the Asian spot market, thanks largely to Indonesia's strong requirement for the naphtha-rich grade, trade sources said Friday.
Traders in Asia said it has been a rather nervous trading week for many producers and sellers, as a total of more than 8 million barrels of Oceania, Southeast Asian, African and US condensate were available this month for regional end-users.
But March-loading NWS condensate cargoes fetched stronger-than-expected premiums, with latest market talk indicating that Woodside Petroleum could have sold 650,000 barrels of the grade for loading over March 17-21 to Mitsui, at a premium of around 50-80 cents/b to Platts Dated Brent crude assessments.
Trade sources also said BHP Billiton likely sold its cargo for loading in March 23-27 to BP at a similar price to Woodside's cargo, while Chevron was said to have received a slightly smaller premium for its March 8-12 loading NWS condensate barrels.
S&P Global Platts assessed Australia's flagship ultra-light crude at a premium of 60 cents/b to Dated Brent Thursday, defying bearish expectations earlier in the trading cycle.
Three regional condensate traders surveyed by Platts earlier this month had expected March-loading NWS condensate cargoes to trade at between parity and a premium of 50 cents/b to Platts Dated Brent crude assessments, though one trader had predicted the price would reach Dated Brent plus $1/b.
2017 TERM SUPPLY TO INDONESIA
Market sources said both Mitsui and BP could have secured the NWS condensate cargoes for loading in the second half of March to fulfill their agreement with Indonesia's state-owned Pertamina, to deliver regular monthly supply of the Australian grade.
Pertamina has secured the delivery of various regional ultra-light crude grades including NWS, UAE's Sharjah condensate and Malaysia's Cakerawala condensate to its Trans Pacific Petrochemical Indotama petrochemical complex over January-June 2017, a company source with direct knowledge of the matter told Platts late last year.
The Indonesian end-user that revolves around a 100,000 b/d condensate splitter would receive a minimum of two 650,000-barrel cargoes of the Australian condensate per month during the first half of 2017.
"It seems that most of the March NWS cargoes are bound for Tuban, Indonesia. TPPI is so much dependent [on the Australian grade]," said a Singapore-based condensate trader.
"It's rather unfortunate that TPPI is not flexible enough to diversify its feedstock options ... there are so many other [condensate grades] available but they can't take advantage of that. Just look at the South Koreans, I can't remember the last time they touched NWS," said a North Asia sweet crude trader.
Meanwhile, some traders pointed out that healthy light distillate and gasoline margins could have also played a part in supporting NWS condensate premiums this month.
Margins for light ends have surged from the previous month, with Singapore naphtha and gasoline commanding a higher month-on-month premium over Dubai. The second-month spread between Singapore naphtha and Dubai swaps, for one, has averaged at 27 cents/b so far in January, a jump of $1.67/b from December's average of minus $1.40/b.
As for gasoline, the spread between second-month average of Singapore 92 RON gasoline and Dubai swaps has risen for the sixth consecutive month to $12.33/b in January to date. Last month, the spread averaged at $11.34/b.
The automotive fuel continued to top the barrel in terms of product cracks so far this month as well -- the 92 RON gasoline grade has edged out gasoil and jet fuel for the second month in a row, with the spread between jet fuel and Dubai swaps averaging 3 cents/b and 8 cents/b lower in January and December.
"Cracks are looking fine, that's true. But without TPPI though, NWS would be trading in small premiums or even discounts considering the current oversupply situation," the North Asia sweet crude trader said.
