Gasoil premiums in the Middle East market have soared over the past couple of weeks as the supplies tightened in the face of strong summer demand.

The demand for gasoil, used in power generation and as transporation fuel usually climbs higher in summer months as temperatures rise near to a scorching 50 degrees boosting the use of air conditioning and as travel traffic increases during Ramadan.

One middle distillates trader said that we're looking at a very tight market with very expensive premiums. Low sulphur 500 ppm gasoil at USD 5 per barrel compared with USD 4.20 per barrel to USD 4.30 per barrel in early July. Another trader pegged 500 ppm at around USD 4.60 per barrel on FOB basis.

Saudi Aramco was among the biggest gasoil buyers and had ramped up its purchases ahead of Ramadan. But traders say the state oil giant is now covered for July and August. They are pretty much done for August although they might pick up one or two more cargoes.

Traders said that apart from Aramco, purchases from Yemen and Jordan as well as East African countries have helped drive the premiums higher. Yemen, whose long-shut oil pipeline has resumed production last week is still seeking oil products as its refinery has not started processing crude yet. The country sought 60,000 tonnes of gasoil on top of the half a million tonne it bought for July and August in earlier tenders.

Source - Reuters

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