KSA may drop crude prices for Asian buyers


Published — Saturday 2 February 2013

Last update 3 February 2013 2:05 pm

| نسخة PDF Print News | A A

The Kingdom may lower its official selling prices for all crude grades for its Asian buyers in March on expectations of weaker demand due to refinery maintenance and warmer weather, a Reuters survey showed.
Saudi Arabia may lower the OSPs for Arab Light and Arab Medium by a dollar per barrel, while Arab Heavy and Arab Extra Light may be cut by 65 cents and 90 cents each, according to the median of estimates from six traders and refiners.
Saudi crude OSPs are usually released around the fifth of each month, and set the trend for Iranian, Kuwaiti and Iraqi prices, affecting some 7 million barrels per day (bpd) of crude bound for Asia.
Spot differentials for March cargoes, which traded last month, weakened considerably over January as refiners from north Asia cut their purchases. A weak Dubai market added further pressure, Reuters reported.
North Asian refiners, who had previously driven prices higher as they stepped up winter buying, slowed their purchases ahead of a heavy refinery maintenance period that kicks off in the second quarter.
“The weak Dubai time-spreads and refinery turnarounds will be the main factors affecting OSPs,” a trader with a western oil major told Reuters.
The front-month Dubai spread narrowed sharply to 10 cents a barrel in backwardation on Jan 31 and dropped to as little as 3 cents per barrel last week. That compares with 40 cents on Dec. 31 and 80 cents in late November.
Immediate prices are higher than those in future months in a backwardated market, suggesting stronger demand for near-term cargoes. But the narrowing to near-zero levels suggests that the strong prompt demand seen in earlier months may be dying out.
Not only is buying by refiners in Japan and South Korea expected to wane as units head into planned maintenance, seasonally warmer weather in April will also likely cut demand for heating fuels.
Complex refinery margins steadily increased during January, to $ 8.50 per barrel from $5.50 at the start of the month, while product cracks — the profit or loss made by a refinery by processing crude into specific products — remained steady, suggesting demand for lighter grades may be stable.
Saudi Aramco sets its crude prices based on recommendations from customers, and after calculating the change in value of its oil over the past month, considering yields and product prices, Reuters reported.

What's happening around Saudi Arabia

JEDDAH: An African expat woman is being investigated for torturing her baby to death by pouring boiling water on her. The motive behind the vicious attack is unknown.The Board of Investigation and Prosecution in Jeddah has charged the woman with semi...
RIYADH: Over five million Overseas Filipinos Workers (OFWs), including more than one million in Saudi Arabia, observed “zero remittance day” on Friday, in protest against the random checking of boxes sent by them to their families back home by the Cu...
JEDDAH: Security authorities have arrested 45 people from different parts of the Kingdom for Daesh links in the past 10 days. Forty of the suspects, accused of terrorism, are Saudis. Others are 2 Yemenis, an Egyptian, a Palestinian, and a national of...
RIYADH: The Ministry of Health announced on Friday that two more people were infected with the Middle East Respiratory Syndrome (MERS) coronavirus. While no deaths were announced, the virus has already killed 26 people in just two weeks, from Aug. 16...
RIYADH: The government and courts have issued 35,010 penalties against citizens and expatriates for violating the country’s residency laws including fines and jail terms.Citizens and expatriates across the Kingdom were penalized for transporting, har...
JEDDAH: As international schools in the city gear up for the new academic session, some parents have requested that schools improve the quality of their classes in Islamic studies. Although the Ministry of Education has decreed that all international...

Stay Connected