Top oil exporter Saudi Arabia is expected to lower its official selling prices (OSPs) for Asian buyers in March, the first cut in three months, tracking falling benchmark prices and coronavirus-induced demand weakness, a Reuters survey showed on Friday.
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In January, benchmark DME Oman’s premium to Dubai swaps fell by 23 cents from last month, while cash Dubai’s premium to swap dipped 8 cents, as Asian refiners’ appetite for crude was crimped by seasonal maintenance and demand uncertainties.
Refiners in China, the world’s second-largest oil consumer, slowed crude purchases in January, pressuring China-focused grades such as Russian ESPO Blend crude, which has weakened to its lowest since September last year.
“Sour crude was dropping fast with China demand off,” a crude trader said, adding that supplies from onshore storage in Asia were still abundant.
Asia’s cracks, or refining margins, for jet fuel and gasoil have fallen in January as fresh waves of the pandemic dampened the recovery.
However cracks for naphtha, gasoline, and low-sulphur fuel oil have strengthened, helped by tighter supplies.
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 Asia-bound crude.
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.
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