PREVIEW-Saudi Arabia may cut October crude oil prices to Asia - survey

Credit: REUTERS/Ahmed Jadallah

Top oil exporter Saudi Arabia is expected to cut its crude oil official selling prices (OSPs) for Asian buyers for a second straight month, tracking a drop in Middle East benchmarks and weak refining margins, industry sources said on Monday.

 (Repeats story published on Monday with no changes to text)
    * Middle East crude benchmarks fall in August
    * Deeper cut likely for lighter grades

    By Shu Zhang and Florence Tan
    SINGAPORE, Aug 31 (Reuters) - Top oil exporter Saudi Arabia
is expected to cut its crude oil official selling prices (OSPs)
for Asian buyers for a second straight month, tracking a drop in
Middle East benchmarks and weak refining margins, industry
sources said on Monday.
    Seven sources from Asian refineries on average expected the
October OSP for flagship Arab Light crude to fall by $1 a
barrel, which would make it the biggest monthly drop since May,
although forecasts ranged from cuts of 50 cents to $1.80 a
barrel, a Reuters survey found.
    Middle East benchmarks cash Dubai and DME Oman differentials
fell by around $1.40 this month, trading at discounts to Dubai
swaps, data compiled by Reuters showed.
    Despite spot purchases by Indian, Korean and Japanese
refiners, Middle East sour crude grades from Abu Dhabi and Qatar
traded at spot discounts in Asia's physical market this month.
    Weak fuel demand because of renewed lockdown restrictions in
response to the continued COVID-19 pandemic have kept market
sentiment bearish, but Aramco is expected to reduce its crude
OSPs gradually, rather than deliver steep cuts in one-go, one of
the sources said.
    Another two of the sources, all of whom asked not to be
named, expected steeper price reductions for lighter grades Arab
Extra Light and Arab Light, as Asia's refining margins for
naphtha and middle distillates dropped in August. Cracks for
gasoline slightly improved.
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    Saudi crude OSPs are usually released around the fifth of
each month, and set the trend for Iranian, Kuwaiti and Iraqi
prices, affecting more than 12 million barrels per day (bpd) of
crude bound for Asia.
    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.
    Saudi Aramco officials as a matter of policy do not comment
on the kingdom's monthly OSPs.
    
    
    Below are expected Saudi prices for October (in $/bbl
against the Oman/Dubai average):
                         SEPT       Change        est.OCT OSP  
    Arab Extra Light    +0.70     -1.80/-0.50     -1.10/+0.20
    Arab Light          +0.90     -1.80/-0.50     -0.90/+0.40 
    Arab Medium         +0.90     -1.50/-0.30     -0.60/+0.60 
    Arab Heavy          +0.60     -1.50/-0.30     -0.90/+0.30
    Source: Reuters, trade     

 (Reporting by Shu Zhang and Florence Tan; editing by Barbara
Lewis)
 ((shu.zhang@thomsonreuters.com; +65-6870-3549; Reuters
Messaging: Twitter @shuzhang4))
 
((Please double-click on the newslink:
[CRU/M] for daily Middle East reports
[OPEC/O] for OPEC stories
[FUEL/A] for fuel oil reports
[LDIS/A] for light products reports
[MDIS/A] for middle distillates reports))

Keywords: SAUDI OIL/PRICES (REPEAT, PREVIEW)

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