Saudi crude OSPs set the trend for prices
Saudi Arabia expected to cut March crude prices for Asia
SINGAPORE, February 2, 2015
Top oil exporter Saudi Arabia is expected to cut prices for most of the crude it sells to Asia in March in line with a weak Dubai market, trade sources said.
Ample supply continued to weigh on the Middle East crude market, widening Dubai's prompt inter-month spread into a deeper contango. Prompt oil is cheaper than supply in future months in a contango market.
Four of the six traders who took part in a Reuters survey expected Arab Light's OSP to fall by about $1 in March while the other two forecast price cuts of just over $2 a barrel.
Traders are also expecting smaller price cuts for Arab Extra Light and Heavy as naphtha and fuel oil cracks rebounded from last month, boosting demand for these grades in Asia.
Arab Extra Light "should increase relative to Arab Light for March as naphtha is so strong", an analyst said.
Saudi OSPs to Asia are set as premiums or discounts to the average of Platts Oman and Dubai prices.
The extent of the price cuts depend on how Saudi Aramco will factor in the spread in its calculations, traders said.
A sharp widening of the Oman/Dubai spread this week could lead to bigger price cuts, they said, although the spread was little changed if compared on an average monthly basis.
Saudi crude OSPs, usually released by the fifth of each month, set the trend for Iranian, Kuwaiti and Iraqi prices, affecting more than 12 million barrels per day (mbpd) of crude bound for Asia.--Reuters
