Last checked at 
* Large volumes of physical cargoes and derivatives
* Saudi Arabia may be main outlet as demand rises for summer
* East Africa, Iraq demand also supports
By Jessica Jaganathan
SINGAPORE, April 22 (Reuters) - Oil major BP and topoil trader Vitol have snapped up at least 7.2million barrels of gasoil in Singapore in April, despite weakAsian demand, in bullish trading by the companies, industrysources said on Monday.
These are some of the largest purchases of physical barrelsin the Singapore trading period in recent years, the sourcessaid.
The two companies have also bought at least 6.6 millionbarrels of gasoil derivatives in April, the sources added.
Asian gasoil demand has been lacklustre as a weaker economicclimate has prompted key consumers like Indonesia and Vietnam tostay away from the spot market, pushing down margins to theirlowest in nearly a year.
"I think it's more a paper game with some firm outlets theymight have and playing into those," a Gulf-based trader said.
SAUDI ARABIAN DEMAND
At least five long-range sized vessels have beenprovisionally fixed by Vitol and BP to carry gasoil fromSingapore to the Red Sea, traders and shipbrokers said.
A dip in Singapore differentials due to the weak regionaldemand has made it economic to ship cargoes from the SoutheastAsian country to the Red Sea, industry sources said.
Saudi Arabia's gasoil demand typically starts increasingfrom April due to summer demand for the power generation fuelwhen temperatures in the Gulf soar, boosting electricity demandfor air conditioning.
The country is set to import about 7 million barrels ofgasoil in April, an increase of about 40 percent from previousmonths, a source familiar with the market said.
"Saudi Arabia is the only stable outlet right now as thereis no outlet in Asia. So for bull game, they might be sellingthe cargoes to the Saudis in May," the source added.
Spokesman for BP and Vital could not immediately be reachedfor comment.
OTHER OUTLETS
Vitol and BP are also likely meeting demand from EastAfrican countries and from Iraq, traders added.
"The demand for gasoil in East Africa is not as bad as inEurope or Asia as they have a basic requirement for mining," aNorth Asian trader said.
"BP seems to have a lot of east-west length," the sourceadded referring to a derivative that traders use to hedgemovement of their physical cargoes from Asia to outside theregion.
East African countries Tanzania and Kenya have been buyingabout 3 million barrels of gasoil in the spot market every monthwhile Vitol has a term contract with Iraq's State Oil MarketingOrganisation (SOMO) to supply about 8.2 million barrels thisyear.
BP has covered most of its 10 ppm sulphur dieselrequirements for May, earlier than usual, signalling its demandfrom Australia could also be up, the source added.
U.S. distillate stockpiles, which include heating oil anddiesel, rose 2.36 million barrels in the week to April 12,compared with forecasts for a draw of 500,000 barrels, data fromthe U.S. Energy Information Administration showed.
The high inventory has made arbitrage from the U.S. toEurope profitable with several companies eyeing movement ofdiesel cargoes on that route, industry sources said.
The large number of purchases will likely draw downinventory in Singapore, which in turn could boost demand inAsia, the sources added.
"In fact, some of the vessels have failed as Singapore isgetting dried up of 500 ppm sulphur gasoil," the first shippingsource added.
DETAILS OF PURCHASES IN APRIL:
Vitol: 2.25 million barrels of 500ppm sulphur gasoil
BP: 4.65 million barrels of 500 ppm sulphur gasoil
BP: 300,000 barrels of 10 ppm sulphur diesel
