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RIYADH: Oil dropped on Wednesday as the market weighed potential interest rate hikes from the US Federal Reserve that could slow growth and dampen oil consumption, offsetting falling US inventories and strong Chinese economic data.
Brent crude futures shed $1.77 cents, or 2.09 percent, to $83.00 a barrel 12.00 p.m. Saudi time, while West Texas Intermediate US crude fell $1.71 cents to $79.12 a barrel.
Saudi Aramco offers more vacuum gasoil supplies for May
Saudi Aramco offered more vacuum gasoil supplies to be exported from its Jazan refinery in May, according to traders and shipping data, in a sign that the refinery is yet to ramp up to full output, Reuters reported.
The Jazan refinery, Aramco’s newest facility, had been expected to ramp up output for 10-parts-per-million gasoil and cut VGO exports this quarter when it hits full capacity.
However, Aramco recently offered three cargoes of 525,000 barrels of VGO each for loading out of Jazan in May, shipping records showed, up from two cargoes in April.
The cargoes are slated for loading between May 1-3, May 11-13, and May 21-23. Aramco usually offers up to two VGO cargoes per month, according to trade sources and past tender records.
VGO, a residual oil left over from petroleum distillation, is typically used as a refinery feedstock to produce diesel.
The rise in Aramco’s VGO exports also comes at a time when diesel refining margins have weakened globally.
Asian refiners’ diesel margins have collapsed by more than 50 percent to $14.46 a barrel on Tuesday, compared with the start of the year, Refinitiv data showed.
Meanwhile, benchmark Northwest European diesel refining margins fell below $16 a barrel this week, their lowest since Feb. 25, 2022, as imports into the region remained high.
Norwegian oil and gas platform resumes operations after spill
Operations at the Njord A oil and gas platform in the Norwegian Sea resumed at normal levels on Tuesday after being halted because of an oil leak, a spokesperson for operator Equinor said.
The platform had been depressurized and production shut down on Monday after discovery of an oil leak of less than 200 liters that is likely to have come from a sampling cabinet, the spokesperson said.
The outage has cut gas supplies by 5.6 million cubic meters per day, according to Norway’s gas pipeline system operator Gassco.
Output from the Njord field stopped in 2016 but resumed in December after upgrades to allow production to continue until 2040, tying in the nearby Bauge and Fenja fields.
(With input from Reuters)