Wednesday 25 April 2018

Saudi Arabia to cut Oct crude prices to Asia

SINGAPORE, September 1, 2014

Top oil exporter Saudi Arabia is expected to cut October prices for all grades sold to Asia, reflecting weak demand and a stronger Oman price marker, trade sources said.
Flagship Arab Light may also see the biggest cut in its official selling price (OSP) since February, a Reuters survey of four refiners showed.
Three of four respondents expect Arab Light's October OSP to be reduced by at least $1 a barrel, the biggest since a $1.30 cut in February.
Intermonth Dubai prices have flipped into contango until March 2015, reflecting weak prompt demand. In a contango structure, prompt prices are lower than those in future months.
The spread between the first and third month flipped to a 50-cent contango in August versus a backwardation of 71 cents in July, a trader said.
The OSP cuts will also be amplified by a stronger Oman price marker against Dubai in the past month, a second trader said.
In the past month, Middle East crude for October loading mostly traded at discounts to their OSPs or to Dubai as Asian refiners cut output on weak margins and opted for cheaper supply from Russia, West Africa and Latin America.
"Demand is weak and it needs time to recover," a second trader said.
While margins for oil products in Asia have improved recently, refiners would need to assess their profits over a longer period in order to be confident enough to increase output, he said.
Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices.
State oil giant Saudi Aramco sets its crude prices based on recommendations from customers and after calculating the change in the value of its oil over the past month, based on yields and product prices. -- Reuters

Tags: Saudi | Crude | prices | OSP |

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