December 3, 2015 / 4:24 AM / 4 years ago

Saudi cut light crude price to Asia less than expected on strong margins

* Focus more on strong refining margins than weak Dubai

* Asia refining margins hit 8-month high

By Florence Tan

SINGAPORE, Dec 3 (Reuters) - Top oil exporter Saudi Arabia cut the January price for most of the crude grades it sells to Asia by a smaller extent than expected, a sign that it took into greater consideration strong refining margins in Asia.

However, the producer raised the official selling price (OSP) for Arab Extra Light on robust naphtha margins, against expectations of a price cut because of weakness in the Dubai crude benchmark.

Saudi’s monthly oil prices set the direction for other OPEC producers Kuwait, Iran and Iraq whom have undercut the top exporter in the last two years in a market share battle that has depressed global prices to six-year lows.

State oil company Saudi Aramco said on Wednesday that it cut the January Arab Light OSP to Asia by $0.10 a barrel versus December to a discount of $1.40 a barrel to the Oman/Dubai average. The price for Arab Extra Light was raised by $0.20 to a premium of $1 to Oman/Dubai.

The cut for Arab Light was smaller than the $0.20-$0.40 price drop forecast in a Reuters survey of six refiners and traders. The Reuters survey showed that market participants expected a cut in Arab Extra Light prices as well.

Aramco typically adjusts prices based on changes in the first and third month spread for cash Dubai prices published by Platts. The spread widened in contango by about $0.35 in November from the previous month, traders said.

But refining margins at a typical complex refinery in Singapore in November hit the highest in eight months. Additonally, Asia’s naphtha crack to Brent NAF-SIN-CRK averaged $111.93 a tonne in November, the highest since September 2014. That likely factored into the decision to raise Extra Light and Super Light prices since those crudes yield more of the petrochemical feedstock when refined.

“I think the main factor is still the Dubai structure and then they adjust it with refining margins and market situation,” a trader with a North Asian refiner said.

“At least they lowered prices and were a bit predictable.”

Saudi Aramco also cut the January Arab Light OSP to the United States by $0.30 a barrel but raised the price to Northwest Europe by $0.50.

The tables below show the full FOB prices for January in U.S. dollars.

Saudi term crude supplies to the United States are priced as a differential to the Argus Sour Crude Index (ASCI). United States

JANUARY DECEMBER CHANGE

EXTRA LIGHT +2.85 +3.55 -0.70 LIGHT +0.15 +0.45 -0.30 MEDIUM -1.35 -1.05 -0.30 HEAVY -1.75 -1.45 -0.30

Prices at Ras Tanura destined for Northwest Europe are set against Brent crude weighted average (BWAVE): NW EUROPE

JANUARY DECEMBER CHANGE EXTRA LIGHT -1.95 -2.65 +0.70 LIGHT -4.25 -4.75 +0.50 MEDIUM -5.90 -6.40 +0.50 HEAVY -8.10 -8.50 +0.40

Saudi term crude supplies to Asia are priced as a differential to the Oman/Dubai average: ASIA

JANUARY DECEMBER CHANGE SUPER LIGHT +2.90 +2.10 +0.80 EXTRA LIGHT +1.00 +0.80 +0.20 LIGHT -1.40 -1.30 -0.10 MEDIUM -3.20 -2.90 -0.30 HEAVY -4.65 -4.45 -0.20

Prices at Ras Tanura for Saudi oil destined for the Mediterranean are set against the BWAVE: MEDITERRANEAN

JANUARY DECEMBER CHANGE EXTRA LIGHT -0.85 -1.65 +0.80 LIGHT -3.60 -4.00 +0.40 MEDIUM -4.95 -5.25 +0.30 HEAVY -6.75 -6.85 +0.10 (Additional reporting by Maha El-Dahan in DUBAI; Editing by Christian Schmollinger)

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