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Kuwait to seal naptha deal at $29/tonne Outlook for sellers in H2 not too good – source

SINGAPORE, May 29, (RTRS): Kuwait Petroleum Corp (KPC) is looking to settle a one-year naphtha contract starting August with Asian buyers at $29 a tonne above Middle East quotes on a free-on-board (FOB) basis, lower than its recent term deal, traders said on Thursday. They said at least one buyer might have accepted the premium but this could not be immediately confirmed. KPC is into its last days of meeting with some its remaining buyers in London. The term talks started on Monday and are expected to end on Friday. Once a buyer accepts the premium level, it sets the tone for the remaining customers, traders said. The current contract premium for full-range naphtha is down 10.34 percent compared to its April 2014 to March 2015 contract sealed at $32 a tonne.

“But the outlook for naphtha from the second half of this year is not looking too good for sellers,” said a Singapore-based source. The Asian naphtha crack was firm for most of last week before slipping to $146.98 on May 28, down from a two-week high of $153.78 at the start of this week. Despite the fall, the current crack value is 12.3 percent higher than when KPC sealed its April 2014 to March 2015 deal in early February. But additional new supplies coming from condensate splitters in Singapore and South Korea from the second half of 2014, coupled with Abu Dhabi Oil Refining Co (Takreer) expected to finish doubling the capacity of its 415,000 barrels per day refinery by the end of the year, are gradually weighing on sellers’ sentiment.

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