Saudi Arabia may raise Asia crude prices

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    SINGAPORE- Top oil exporter Saudi Arabia is expected to raise its official selling prices (OSPs) for Asian buyers in January, tracking stronger benchmark prices as some refiners increase output to meet higher winter demand, a Reuters survey showed.

    Six sources at Asian refiners expect the January OSP for Saudi flagship crude grade Arab Light to rise by 65 cents a barrel on average, with their forecasts ranging between an increase of 50 cents and 85 cents.

    Two of the sources forecasted bigger price increases for Saudi lighter grades than heavier ones, as they contain more middle distillates, gasoil and jet fuel, which were more profitable for refiners this month.

    Strong demand for spot crude pushed up November’s average differentials to Dubai swaps for benchmarks cash Dubai and DME Oman by around 80 cents a barrel from last month, data compiled by Reuters showed.

    Refiners such as Indian Oil Corp stepped up crude purchases in November as fuel demand recovered while weather forecasts were pointing to a harsher winter.

    For other oil products, Asia’s cracks for very low sulphur fuel oil margins also strengthened in November, while gasoline and naphtha weakened due to ample supply.

    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 crude bound for Asia.

    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.

    Meanwhile, oil prices slipped on Tuesday amid concerns over mounting supply after leading producers delayed talks on 2021 output policy that could extend production cuts as the coronavirus pandemic continues to sap fuel demand.

    Opening trading for December Brent crude was down 20 cents, or 0.4 percent at $47.68 a barrel by 0136 GMT, after dropping more than 1 percent on Monday. West Texas Intermediate CLc1 was down by 27 cents, or 0.6 percent at $45.07 a barrel, having dropped 0.4 percent in the previous session.

    Still , both contracts surged around 27 percent in November, the biggest monthly gains since March after COVID-19 vaccine developments raised hopes of an economic recovery that could boost fuel demand.

    OPEC+ delayed talks output policy for next year until Thursday, three sources told Reuters, as key players were still in disagreement on how much oil they should pump amid weak demand. The grouping, including the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, had been scheduled to hold its meeting on Tuesday after discussions of key ministers on Sunday failed to reach a consensus.