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IOC buys 2,40,000T term kerosene from Shell

IOC buys 2,40,000T term kerosene from Shell
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First Published: Mon, Aug 31 2009. 12 55 PM IST
Updated: Mon, Aug 31 2009. 12 55 PM IST
New Delhi: Indian Oil Corp (IOC) has bought via a term tender 240,000 tonnes of kerosene from Shell for November-April delivery, traders said on Monday.
Some traders said the premiums were likely around $2.50-$3.00 a barrel to the Indian state refiner’s price formula on a cost-and-freight (C&F) basis, steady to the $3.00 premium it also paid Shell recently for a 40,000-tonne spot cargo for September delivery.
IOC had bought the same amount for May-October delivery, or 40,000 tonnes each month for the six-month period at premiums of less than below $3.00 a barrel, C&F.
But the latest term purchase failed to lift sentiment, as the market continued to be saddled with supplies.
“Reliance keeps selling jet through the west coast, while IOC imports the product into the east coast,” said a trader.
As a result, there is no substantial net loss of the products regionally.
Additionally, as this is a regular term purchase, traders said it did not have that much of an impact on the market.
Supplies of middle distillates, including jet fuel, has been overflowing despite refinery run cuts, mirroring poor demand.
Sellers are hoping that a severe winter would strike in order for supplies to be absorbed for heating purposes.
Traditionally, jet fuel prices were higher than diesel, but the reverse briefly occurred on 11 Augustwhen the regrade slipped into a discount for the first time in about two months as demand for air travel declined.
The regrade flipped back into a slight premium on 13 August, as South Korean refiners maximise diesel production over jet fuel.
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First Published: Mon, Aug 31 2009. 12 55 PM IST