14:48 | 03/04/2018 Global Economy
Top oil exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in May to reflect weaker prices for its Middle East benchmark Dubai crude, trade sources said on Monday.
|A file photo by Reuters shows the Shaybah oilfield complex at night in the Rub' al-Khali desert|
The official selling price (OSP) for flagship Arab Light crude could fall by 50-70 cents, to the lowest in six months, a Reuters survey of six refiners and traders showed.
“We expect cuts of 50-60 cents across all grades,” one of the respondents said, in line with market changes last month.
The price spread between the first and third month Dubai spot prices widened by 55 cents a barrel in contango in March versus February, the sources said, speaking on condition of anonymity because there weren’t authorized to discuss the matter with media.
In a contango market, prompt prices are lower than those in future months, indicating weak demand for spot cargoes.
Most of the respondents expect similar price cuts across all grades in May, although one person said he expects a smaller cut for Arab Extra Light’s OSP on support from firm naphtha margins. He also expects a bigger price cut for Arab Heavy because of widening losses in producing fuel oil.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.