Qatari Marine Crude Trade Jumps

Qatar Marine crude is trading at the highest level in four weeks versus its official selling price as Japanese refiners replenish supplies of kerosene for heating and Saudi Arabia cuts shipments of similar grades. Qatar Marine for loading in October jumped on 23 August 2010 to a premium of 5 cents a barrel relative to the benchmark producer prices, compared with a discount of 8 cents the previous week, according to data compiled by Bloomberg. The kerosene-rich blend has traded at an average of 9 cents below its official selling price during the past year.

Japanese refiners are seeking the medium-grade oil to bolster supplies before winter heating demand peaks. The country’s stockpiles of kerosene were at 2.179 million kiloliters, or about 13.7 million barrels, in the week through 28 August 2010, the lowest on record for the time of year, according to data from the nation’s Petroleum Association.

“Refiners are buying October cargoes now because they are concerned about the low inventory for kerosene,” said Akira Kamiyama, a derivatives trader with Mitsui & Co. in Tokyo. “The Middle East crude is a good value.” Qatar, the smallest oil producer after Ecuador among the 12 members of the OPEC, was the fourth-largest supplier of crude to Japan in July, according to data from the Ministry of Economy, Trade and Industry. Japan bought 2.1 million kiloliters from the Middle East nation in July, about 12 % of its imports. Qatar Marine’s kerosene yield is about 14% by volume after basic processing, according to data from Energy Intelligence Group. Arab Light, the Middle Eastern nation’s biggest export grade, produces about 9.6%.

Rising Margins

Japanese refiners are buying Qatar Marine now to ensure supplies reach the nation before the coldest months. The profit from cracking, or reprocessing, the blend was US$1.73 a barrel, according to data compiled by EnSys Energy and Bloomberg. The average over the past six months is US$1.65. Crude purchased for October loading would take about 23 days to reach Japan from the Middle East aboard a Very Large Crude Carrier, arriving by the end of the month or early November, according to Bloomberg data.- Bloomberg