SINGAPORE, July 6 (Reuters) - Saudi Arabia set higher-than-expected official selling prices (OSPs) for most grades in August, a move that is likely to set a floor for values of Middle East crude in the coming month.
Asian refiners may skip taking extra crude from top exporter Saudi Arabia as the kingdom failed to cut prices deeply enough to lure buyers and as the release of reserves by the IEA is boosting supplies in the region.
Top consumers such as China, Japan and South Korea have not come forward yet to ask for additional supplies even as Saudi Arabia offered more oil to some Asian buyers for August on top of contractual volumes, an industry source said on Wednesday.
* STICKER SHOCK
"The cuts in Saudi OSPs are far less than expected, especially when you compare the cuts in Qatar and UAE OSPs," a trader at a major Saudi crude buyer said.
"For August loading cargoes, we plan to nominate according to the long-term contact. We haven't seen any additional demand from our refineries so far."
Aramco set the Arab Light price for August at Oman/Dubai plus $1.35 a barrel, down from $1.45 for July, and sliced 50 cents off Extra Light crude for Asia to Oman/Dubai plus $2.95 a barrel, the state oil company said.
It raised the price of Arab Medium by 30 cents to a discount of 35 cents a barrel and that of Arab Heavy by 75 cents to a discount of $1.90.
"The new Saudi OSPs are unusually high. The August Arab Medium OSP is the most incredible among all the Saudi OSPs," a trader at a Chinese trading house said. "We won't buy any more Saudi barrels beyond our long-term contract."
Timespreads along the Dubai curve strengthened on the back of the Saudi OSP's, narrowing the contango between August and September to 20 cents from 26 on Tuesday and to 17 cents between September and October from 21 cents a day earlier.
Saudi Arabian oil exports may trail far behind rising output this summer as its power stations burn more crude than ever before to keep a booming population cool, part of a trend that is squeezing spare output capacity, analysts say.
* OTHER OSPs
- Qatar has set the retroactive official selling price (OSP) for Qatar Marine crude for June at $108.45 a barrel, down $1.15 from May, the official Qatar News Agency said.
- The differential against the average price of benchmark Dubai crude for June was at a premium of $0.68 a barrel, down from a premium of $1.22 a barrel in May.
- The Gulf Arab state set the June Qatar Land crude OSP at $111.20 a barrel, down $1.45 from May, the report said. That represents a $3.43 a barrel premium to Dubai crude, lower than the $4.27 premium for May.
* DME OMAN
- September Oman traded on the DME rebounded by 18 cents to a premium of 3 cents to Dubai swap quotes at 0830 GMT, using the settlement price for DME futures, the ICE one-minute marker for Singapore and the Brent-Dubai EFS as calculated by Reuters.
- The Brent/Dubai Exchange of Futures for Swaps (EFS) for August dipped 3 cents to $5.85 a barrel at 0830 GMT, Reuters data showed. The front-month EFS on June 15 touched $9.20, the highest intraday value since the spread reached a record of almost $12 in October 2004.
* MARKET NEWS
- China raised interest rates for the third time this year on Wednesday, making clear that taming inflation remains a top priority even as its vast economy gently eases.
- The 25-basis-point increase in lending and deposit rates underscores China's quiet confidence that the world's second-biggest economy is resilient enough to take tighter monetary policy in its stride, and is not threatened by a hard landing that some investors fear.
- Japan's commercial crude inventories rose 1.3 percent last week from the week before, while gasoline sales plunged year-on-year by nearly a fifth for the second straight week after the country's move to scrap toll discounts discouraged highway travel, industry data showed.
- South Korea has so far released less than a third of the oil products earmarked under an International Energy Agency plan to bolster supplies, while no crude has been lifted yet, state-run Korea National Oil Corp (KNOC) said on Wednesday.
- A total of 1.519 million barrels of oil products and 1.948 million barrels of crude oil will be released, a KNOC spokesman said, slightly different from the previously announced preliminary numbers of 2 million barrels of crude and 1.46 million barrels of products.
* CRACK SPREADS
- Fuel oil's August crack widened 54 cents to a discount of $7.36, its lowest since June 16, while September crack was 56 cents wider at a discount of $8.06 a barrel to Dubai crude on higher crude benchmarks.
- Gas oil's August crack slipped 52 cents to a premium of $18.00 a barrel to Dubai crude, while the September crack was 48 cents lower at $17.92.
- Naphtha CFR Japan's August discount to Brent crude widened 47 cents to $7.57, while September's crack was 41 cents wider at a discount of $6.83 a barrel.
* OUTRIGHT PRICES
- August ICE Brent LCOc1 was at $112.77 a barrel at 0830 GMT, up $1.73 from Tuesday. (Reporting by Alejandro Barbajosa, Osamu Tsukimori and Judy Hua)