ME gasoline prices fell nearly $3 this week as signs of a recovery in the global financial system looked dim.
Middle East gasoline prices fell nearly $3 this week as concerns over the state of global oil demand started to swell as signs of a recovery in the global financial system looked dim.
Regional gasoline prices were pegged at $4.35 a barrel, traders said, versus levels seen the previous week.
"Last week there was a lot of positive news in the market which lifted sentiment artificially," an Asian-based trader said.
"But the reality is that we are a long ways from the kind of demand we saw over the past few years, before this credit mess."
The International Energy Agency on Monday cut sharply its medium-term forecast for oil demand because of the economic recession.
The advisor of 28 developed countries said in a report demand will expand by 0.6 percent, or 540,000 barrels per day (bpd) on average, between 2008 and 2014. Its previous forecast issued in December predicted annual growth of 1 million bpd.
Demand could contract further depending on the pace of recovery from recession, which has cut fuel use in the United States, Europe and Asia, the IEA said.
Gasoline demand in the region looks a little soft, with Iran already deferring some of its July purchases into August.
Saudi Arabia is also thought to be lowering its spot gasoline purchases, as it brings online a gasoline making unit at the $10.3 billion Rabigh Refining and Petrochemical Co (PetroRabigh) in July.
Fuel oil supply problems in the Middle East look to be easing especially in the bunkering hub of Fujairah, traders said.
Regional fuel oil prices eased $1.25 a tonne, versus $6 a tonne from the previous week.
At least one cargo of about 240,000-300,000 barrels was expected to arrive from Reliance's refinery in the West Coast of India, traders said.
"There is a cargo coming, but no details on shipping information at the moment," a trader said.
Fujairah, one of the world's top bunkering ports, has been grappling with tight supplies due to lower fuel oil exports from Iran and Iraq.
As the summer rolls up, fuel oil sellers in the region traditionally cut back on their spot exports to build inventories for local consumption.
Middle East gas oil prices were unchanged this week versus levels seen the previous week. Prices were pegged at around $1.40 a barrel.
Regional demand continues to remain stable with no indications that summer demand could spike.
Globally distillate demand has been week, with nearly 62 million barrels pushed into floating storage.
Uncertainty remains over how much of the oil in floating storage can be absorbed by the market this winter, traders said.
"Effectively the companies storing oil are betting demand will improve as we get to the end of the year....I'm not so sure this is going to happen," a trader said.
"Basis what you hear ...it could be first-quarter next year before signs of an improvement starts to be visible." (Reuters)