SINGAPORE (Reuters) - Russia’s Sokol crude, which yields more middle distillates like jet fuel and gasoil from refining, has slumped to a record spot discount in the Asia market, two trade sources said on Monday, as fuel demand takes a hit from the coronavirus pandemic.
Indian oil explorer ONGC Videsh sold one 700,000-barrel cargo of Russian Sokol crude for loading between June 2-8 at a discount of around $8 a barrel to Dubai quotes via a spot tender that was closed and awarded last Friday, likely to a trader, the sources said.
That is the lowest price differential ever recorded, according to Refinitiv Eikon assessments starting from 2011.
In comparison, last month ONGC sold a Sokol crude cargo loading May 22-28 at a spot premium of around $3.20 a barrel to Dubai quotes to a trader, sources told Reuters at the time.
(GRAPHIC: Sokol differential vs Dubai crude oil falls to record lows - here)
Physical crude prices have been hampered globally amid oversupply as refiners in Asia, Europe and the Americas cut runs or shut down plants.
Vietnam-Malaysia’s medium sweet grade Bunga Kekwa crude also slipped from premiums to a spot discount of around $5 to dated Brent in a tender closed on March 30 for a 300,000-barrel cargo loading May 31-June 1, sources said last week.
Transport fuel demand has taken a beating from stringent government lockdown measures to limit the spread of the coronavirus that causes COVID-19. The measures have disrupted the normal daily activities of some 3 billion people.
Asian refining profit margins - known as cracks - for jet fuel and 10 ppm gasoil slumped to record lows on Friday.
Oil traders are awaiting for a meeting to be held later this week among some of the world’s top producers - including Saudi Arabia and Russia - to discuss output cuts that could partly alleviate oversupply in global markets, trade sources told Reuters on Monday. [O/R]
Reporting By Shu Zhang; Editing by Christian Schmollinger and Tom Hogue