UPDATE 2-Saudi cuts August light crude prices to Asia to attract buyers

Fri Jul 1, 2016 6:30am GMT
 

* Saudi cuts light crude prices to Asia by more than
expected
    * Aug Arab Extra Light price drop biggest in 9 months
    * Likely to intensify competition with Russia, UAE

 (Adds quotes, milestone, changes date)
    By Florence Tan and Josephine Mason
    SINGAPORE/NEW YORK, July 1 (Reuters) - Saudi Arabia has cut
August prices of the light crude oil grades it sells to Asia,
with that for Arab Extra Light dropping by the most in nine
months, in a bid to spur demand for the additional volumes being
pumped from an expanded field.
    Coming before refiners in Asia head in to their maintenance
season, the price cuts by the world's top oil exporter are an
attempt to ensure buyers lift more light crude, mainly Arab
Extra Light - additional 250,000 barrels-per-day of which are
set to be pumped from the kingdom's Shaybah oilfield in July.
    Saudi Arabia's move to lower the official selling price
(OSP) will intensify competition with rivals such as Russia and
the United Arab Emirates, who produce similar oil grades and are
also looking for a bigger share of the market in Asia, the
world's top oil consuming region. 
    "They're more proactively marketing Arab Extra Light and
that will definitely put pressure on ADNOC (Abu Dhabi National
Oil Company)," a trader with a North Asian refiner said.
    Saudi Aramco (IPO-ARMO.SE: Quote) on Thursday slashed the August
OSP for Arab Extra Light crude by 90 cents a barrel from July,
the biggest drop in nine months. This was nearly double traders'
expectation for a 30-50 cents cut. 
    The state oil giant lowered the August OSP for Arab Light by
40 cents, slightly more than traders' forecasts of 25-30 cents
but in line with an earlier Reuters report. 
    Saudi OSPs could hurt rival light grades like UAE's Murban
during what is expected to be a season for weak demand in Asia
as several refineries shut for maintenance in the third quarter.
    Already, a near doubling of Asia's crude benchmark Dubai
DUB-1M-A from the first quarter has hit refining margins.
    Profits for gasoline and naphtha at Singapore are near
five-year lows, weighing on values of light crude that yield
more of these fuels. GL92-SIN-CRK NAF-SIN-CRK
    In fact, Murban MUR-1Madn- cargoes loading in August have
been sold at discounts against their OSP.
    Outside Asia, Aramco hiked the Arab light price to Northwest
Europe by 30 cents a barrel versus July to a discount of $4.50 a
barrel to the Brent Weighted Average (BWAVE).
    The Arab Light OSP to the United States was set at a premium
of $0.45 a barrel to the Argus Sour Crude Index (ASCI) for
August, down 10 cents a barrel from the previous month.

 Saudi term crude supplies to the United States are priced as a differential to the ASCI.    
 United States                                                                               
              AUGUST    JULY         CHANGE                                                  
 EXTRA LIGHT  +1.70     +2.10         -0.40                                                  
 LIGHT        +0.45     +0.55         -0.10                                                  
 MEDIUM       -1.15     -1.05         -0.10                                                  
 HEAVY        -1.65     -1.55         -0.10                                                  
 Prices at Ras Tanura destined for Northwest Europe are set against BWAVE:
 NW EUROPE
              AUGUST    JULY         CHANGE
 EXTRA LIGHT  -2.55     -2.55          0.00
 LIGHT        -4.50     -4.80         +0.30
 MEDIUM       -5.95     -6.45         +0.50   
 HEAVY        -7.95     -8.60         +0.65   
 Saudi term crude supplies to Asia are priced as a differential to the Oman/Dubai average:
 
 ASIA
              AUGUST    JULY        CHANGE
 SUPER LIGHT  +3.35     +4.05        -0.70
 EXTRA LIGHT  +1.70    +2.60         -0.90
 LIGHT        +0.20    +0.60         -0.40
 MEDIUM       -1.20    -1.00         -0.20
 HEAVY        -2.80    -2.65         -0.15
 Prices at Ras Tanura for Saudi oil destined for the Mediterranean are set against the BWAVE:
 MEDITERRANEAN
              AUGUST    JULY         CHANGE
 EXTRA LIGHT  -2.60     -1.80         -0.80
 LIGHT        -4.50     -4.05         -0.45
 MEDIUM       -5.90     -5.70         -0.20 
 HEAVY        -7.20     -7.20          0.00 
 
    
 (Reporting by Josephine Mason, Reem Shamseddine and Florence
Tan; Editing by Susan Fenton and Himani Sarkar)
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