July 16, 2012 / 6:43 AM / 5 years ago

UPDATE 1-India MRPL sells Aug fuels, gasoil premiums at 2-yr high

* MRPL gasoil premiums up on demand; tight supplies

* Sells gasoline at highest premium this year

* Improved petchem margins support naphtha prices

* MRPL sells jet fuel at $1/barrel discount to Singapore quotes (Adds comments; details)

SINGAPORE, July 16 (Reuters) - India's MRPL has sold a total 136,000 tonnes of middle distillates and light distillates for August loading, with gasoil premiums hitting at least a two-year high and gasoline premiums at their highest this year, traders said on Monday.

Demand for gasoil, used as a power generation fuel, remains on the rise in the Middle East as temperatures soar and the use of air-conditioners increases.

This places upward pressure on premiums across all gasoil grades. Countries such as Jordan and Yemen are either seeking or have bought nearly 800,000 tonnes of high sulphur gasoil for the second half of this year, which is also boosting demand for the product.

A series of attacks on a pipeline running through Egypt, Israel and Jordan which disrupted gas supply to the countries, has forced them to turn to oil products such as gasoil for back-up power generation, while Yemen is reliant on fuel imports as its main refinery was shut after blasts ripped through it.

"It's a combination of push and pull factors, especially with high sulphur gasoil production being much less," a Singapore-based trader said.

With refineries in the Middle East competing to upgrade to facilities that convert the heavier high sulphur gas oil to more expensive and cleaner fuel, only a few produce higher sulphur grades containing 5,000 parts per million (ppm) and 2,000 ppm sulphur gas oil.

MRPL has sold 40,000 tonnes of 0.5 percent sulphur gasoil for loading over Aug. 1-3 to trader Trafigura at a premium of about $3 a barrel above Middle East quotes, they said.

This is about 25 percent higher than the $2.40 a barrel premium achieved by the refiner for a July-loading cargo sold earlier and the highest in at least two years, according to Reuters data.

Historical data on MRPL's trades are not available, but an industry source had earlier said the refiner sold high sulphur gasoil cargoes at premiums of more than $3 a barrel in 2008, when diesel prices were boosted by demand from the Beijing Olympics.

It is unclear where Trafigura is planning to send the cargo, but it regularly ships gasoil into Africa, traders said.

Meanwhile, MRPL has also sold 36,000 tonnes of jet fuel for Aug. 3-5 loading to Mercuria at a discount of $1 a barrel to Singapore quotes, about 20 cents weaker than a July-loading cargo sold earlier.

This is likely due to weaker arbitrage economics to send the product from Asia to Europe, traders said.

NAPHTHA, GASOLINE IN DEMAND

MRPL has separately sold 35,000 tonnes of naphtha for Aug. 8-10 loading to PetroChina at premiums of $29.50 a tonne to Middle East quotes on a free-on-board (FOB) basis.

This is the highest premium MRPL has fetched since mid-May when it sold an early June cargo to Statoil at $34.00 a tonne.

Improved petrochemical margins have helped support demand for naphtha feedstock.

The refiner has also sold 25,000 tonnes of 92-octane gasoline for Aug. 5-7 loading to Gunvor at premiums of $3.75 a barrel to Middle East quotes on FOB basis.

This made it the highest premium among a total of three cargoes sold this year as MRPL is a rare gasoline exporter. (Reporting by Jessica Jaganathan and Seng Li Peng; Editing by Himani Sarkar)

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