Adnoc has raised term middle distillate prices for liftings in 2007, but has not renewed sales of high-sulphur diesel as more Asian buyers switch to cleaner fuel, traders said.

Adnoc fixed the premium for 0.05 per cent sulphur gas oil at $3.00 a barrel to Middle East spot quotes for 0.25 per cent diesel, up 60 cents on 2006 deals, bucking the steady or lower rates agreed earlier last year by Kuwait and Saudi Arabia, which are still selling higher-sulphur fuel.
The 2007 premium for term jet fuel prices rose to $2.10 a barrel above Middle East quotes from $1.85-$2.00 a barrel last year. The prices are on a free-on-board basis.
“They are not exporting the 0.5 per cent sulphur grade this year. Demand is rising within the low sulphur pool,” said a Singapore-based trader.
Adnoc, which had sold higher-sulphur gas oil on a term basis last year, began exporting 0.05 per cent sulphur diesel earlier last year when an upgrade at its 420,000 barrels per day Ruwais refinery was completed, sources said.
Demand for cleaner fuels will rise this year as major importers Indonesia and Vietnam are expected to shift from 0.5 per cent grades to medium-sulphur diesel fuel. Others such as Australia and Japan are already using ultra-low sulphur grades.
Among the term buyers were oil majors Chevron Corp, Total SA and BP, as well as US investment bank Morgan Stanley.
Adnoc’s higher prices bucked the trend of steady or lower premiums on distillate exports from the Middle East, where most producers are still selling higher-sulphur grades.
Saudi Aramco agreed to keep 2007 term premiums for 0.5 per cent sulphur diesel steady at $2.25 a barrel over Middle East quotes.
Kuwait reduced term prices for 0.2 per cent sulphur gas oil at $2.05 a barrel above Middle East quotes for 2007, down 20 cents from last year.