Sudan sells term Nile Blend at larger premiums

July 24, 2008 (SINGAPORE) — Sudan has sold term September-to-December Nile Blend crude at higher premiums in a sign of strengthening demand for the grade despite high Minas prices, traders said on Thursday.

European trader Arcadia and French major Total were awarded term volumes at premiums of between 30 and 50 cents to the weighted average of the differentials fetched in Sudanese state oil company Sudapet’s spot tenders in a given month.

The deals have yet to be confirmed, but the levels would be higher than the 20- and 29-cent premiums fetched in the current term tender, for June to August-loading Nile Blend crude.

Sudapet had offered 1.6 million barrels per month for lifting between September and December, steady from the volumes sold on a term basis for June to August.

Total bought two 600,000-barrel cargoes, with Arcadia taking the rest, traders said.

The larger premiums came despite Minas quotes fetching record premiums of up to $4.20 a barrel to Brent futures this month, suggesting that demand for the heavy sweet crude, which can be directly burnt by utilities, remained strong.

Minas, the benchmark for heavy sweet crudes sold in Asia, such as Nile Blend, normally trades below light sweet Brent crude, except at times of acute power shortages in Japan.

Higher Minas quotes prompt buyers to ask for weaker differentials, and usually lead to deeper discounts for Sudanese Nile Blend crude.

Falling output, which is believed to now stand below 250,000 barrels per day, down from a peak of 320,000 bpd, may be supporting demand for the grade.

Sudapet had also offered 1 million barrels of Nile Blend crude for September loading, but details of the award have yet to emerge.

(Reuters)