Malaysia buys August oil products on refinery issue
Operators of the Malacca refinery, Malaysia's second-largest refining centre, have bought at least 60,000 tonnes of diesel and jet fuel for August delivery to meet prompt demand after the plant cut output, industry sources said on Tuesday, Reuters reports.
The purchases come amid a rise in jet fuel premiums to a four-year high on reduced supply in Asia, with nearly 1 million barrels per day (bpd) of refining capacity shut as refineries undergo maintenance in Singapore, Thailand, Japan, Vietnam, India and Taiwan. QJET-SIN-DIF
State-owned oil company Petroliam Nasional Bhd (Petronas) and U.S. oil company Phillips 66, which operate a 110,000-barrel-per-day (bpd) crude distillation unit (CDU) in Malacca, had bought a 500 ppm sulphur gasoil cargo and a jet fuel cargo for delivery in August, the sources said.
The refinery had reduced output after a gas leak, said a source familiar with the matter, adding that normal output was expected to resume early next week.
Neither the reason for the delay nor how much run rates had been affected could be confirmed. Officials from both companies could not immediately be reached for comment on the matter.
DEMAND UP FOR EID AL-FITR
Demand for road transport fuel increases in Malaysia during Eid al-Fitr, the culmination of the Muslim fasting month of Ramadan, which falls next week. Road travel is expected to rise as Malaysians visit their hometowns from cities during the festivities.
Petronas had bought two diesel cargoes as well as gasoline for September delivery to meet the spike in demand, traders said, in addition to August spot imports following the refinery issue.
"There has also been talk of elections happening soon, so there's some stockpiling happening to meet an anticipated increase in demand," a trader said.
Speculation has been swirling for a year over the timing of what is expected to be a fiercely fought election, which Prime Minister Najib Razak must call by next March.
The elections, when they happen, will likely increase demand for diesel and gasoline, traders said, as people travel to their hometowns to cast their votes.
While Malaysia imports middle distillates every month, Petronas rarely does so unless there is a spike in domestic demand or an outage at one of its refineries, traders said.
Royal Dutch Shell Plc operates the country's largest Port Dickson refinery, while ExxonMobil Corp operates the Esso Port Dickson refinery. Petronas operates one other refinery in Malacca and a smaller one in Terengganu.