Aramco Cuts Asia Oil Differentials, Lifts U.S.: Persian Gulf Oil

-- Saudi Arabian Oil Co., the world’s largest crude exporter, reduced official selling-price premiums for most December shipments to Asia more than refiners anticipated amid falling fuel-processing profits.

National Iranian Oil Co. was also poised to cut premiums for December sales to Asia for the first time in three months, following the Saudi reductions. Abu Dhabi and Qatar both cut the retroactive prices for all crude grades loaded last month.

The following is a weekly summary of Persian Gulf crude and product market news and forthcoming events:

Crude Oil

Saudi Aramco, Saudi Arabia’s state-owned oil producer, cut premiums on light and medium crudes to Asia for December, raising only the differential on its Heavy grade. Aramco raised December premiums for all oil to the U.S. and Northwestern Europe and increased differentials on most crude to the Mediterranean. The company reduced the premium for Extra Light sold in the Mediterranean region.

To Asia, Aramco cut the premium for its Arab Super Light crude the most, by $1.70 a barrel. The decrease in the premium, to $3.95 a barrel over the Asian benchmark, left it at the same level as that of Arab Extra Light crude for the first time since November 2009, data compiled by Bloomberg show.

The cut for December shipments of Arab Extra Light of 70 cents a barrel was deeper than the 25-cent decrease expected by seven refiners and analysts surveyed by Bloomberg. Customers had foreseen smaller cuts for Aramco’s lightest grades because profits for the refiners that process crude into naphtha have dropped amid waning demand for plastics.

“Aramco’s December OSPs may have a negative impact on the spot market, since buyers may ramp up purchases of cheaper term contract barrels,” researchers led by David Wech at Vienna-based JBC Energy said in their weekly Asian Oil Markets report. “However, given strong Chinese crude buying and lower refinery maintenance in the time to come, strong demand should still support the prompt market.”

Aramco bases its exports to Asia on the average of Oman and Dubai grades, the Gulf benchmarks used by traders in Asia.

Oman crude will sell at $104.88 a barrel in December, a 2 percent drop from November, based on the average of daily futures settlement prices on the Dubai Mercantile Exchange. That’s the lowest official selling price in eight months.

Tehran-based National Iranian will reduce Iranian Light by 20 cents to $2.74 a barrel above the average of Oman and Dubai grades, based on its formula linking the crude to Saudi prices. Premiums for Iranian Heavy and Forozan Blend crude will be lowered by 5 cents a barrel. The company may announce prices for supply to Asia, the Mediterranean, Northwest Europe and South Africa this week and will also set differentials for Soroosh and Norooz, sold to Asia and the Mediterranean.

Abu Dhabi National Oil Co., a state-run producer in the United Arab Emirates, reduced prices for Murban and Lower Zakum shipments last month by 1.8 percent. Adnoc, as the company is known, cut the retroactive price for October exports of Murban crude by $1.95 a barrel to $108.95 and cut Lower Zakum by the same amount, to $108.65 a barrel.

Adnoc reduced the price for the Umm Shaif grade by 1.7 percent to $108.25 a barrel compared with September. October prices for all three grades were the lowest since February. The company pared Upper Zakum oil by 1.5 percent to $105.65 a barrel.

Qatar Petroleum cut the price for Marine crude loaded in October to $105.30 a barrel, compared with $107.85 in September, and Land crude to $108 a barrel, from $110, according to the Qatar News Agency.

In regional trading, Oman oil futures slipped 93 cents a barrel, or less than 1 percent in the week, to close at $107.64 a barrel on Nov. 4, according to Bloomberg data. Dubai crude fell 76 cents last week, to $107.03 a barrel.

The spread between Dubai and Brent crudes widened, with Dubai selling for $4.94 a barrel less than the European benchmark, compared with a discount of $2.12 seven days earlier.

Light Products and Natural Gas

Qatar International Petroleum Marketing Co. offered to sell as much as 1.88 million metric tons of naphtha and light liquids for shipment next year, according to tender documents.

The state-run company, known as Tasweeq, offered two cargoes of 25,000 tons each per quarter of naphtha from the Oryx gas-to-liquids plant and as much as 40,000 tons per month from the Pearl GTL plant that Qatar runs with Royal Dutch Shell Plc. Tasweeq also offered as much as 50,000 tons each of plant condensate and full-range naphtha per month.

The products are for loading from January through December 2012 and offers close Nov. 21 and are to be valid until 1 p.m. on Nov. 24. Loading will be from Qatar’s Ras Laffan port.

Kuwait Petroleum Corp. raised its November liquefied petroleum gas prices. Propane will cost $750 a metric ton, from $680 in October, and butane was set at $810 a ton, from last month’s $705, the company said.

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