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2nd UPDATE: Saudi Cuts March Arab Light OSP To Asia; Super Light Hike Surprises

Monday, Feb 06, 2012

-- Saudi cuts OSP for March term supply of Arab Light to Asia

-- Increase in OSP of Arab Super Light puzzles traders

-- Cut in Saudi Extra Light could weigh on Murban

(Adds market reaction in paragraphs 3-8.)

   By Gurdeep Singh 
   Of DOW JONES NEWSWIRES 
 

SINGAPORE (Dow Jones)--Saudi Arabian Oil Co., or Saudi Aramco , has cut its official selling price for March term supply of Arab Light crude oil to Asia, the state-owned company said in an official notice late Sunday.

Saudi set the March OSP for Arab light to Asia at a premium of $1.55 to Oman-Dubai quotes, compared with a premium of $2.05 in the previous month.

The response to Saudi's Asia OSP was mixed, with some traders saying that they expected larger cuts in the prices of some of the lighter grades.

"It was less attractive than our expectations," said a trader with a Japanese refiner, who expected at least a 70-cent cut in the Arab Light OSP.

The increase in the OSP of Arab Super Light also puzzled traders. While the 10-cent increase in the ASL OSP could be due to improving naphtha cracks, traders said by the same logic strong fuel oil cracks would have warranted higher Arab Heavy OSPs, which, on the contrary, was reduced by 40 cents. The ASL grade is sold only to Asia.

"This is not in line with their usual evaluation, it's tricky," said a trader with a South Korean refiner. "We were expecting a deeper cut than other grades."

Saudi Aramco appears to be using stronger naphtha cracks as an excuse to raise ASL's price, whereas in the past it raised ASL OSPs even when naphtha cracks slid, he said.

Looking ahead at the spot trade for April-loading cargoes, traders said the cut in Saudi Extra Light could weigh on Murban despite a higher-than-expected 97-cent reduction in its OSP.

The spot value for Murban after the Saudi OSP "maybe (at) a small negative. It depends a lot on any arbitrage flow too," a Singapore-based trader said.

The March OSP for Arab light to Northwest Europe was set at a discount of $0.85 to the Brent Weighted Average, or BWave, compared with a discount of $1.75 in the previous month.

It cut the March Arab Light crude OSP to the U.S. by $0.30 to a discount of $0.05 versus the Argus Sour Crude Index.

Saudi Aramco 's crude oil official selling prices, in U.S. dollars a barrel, follow:

To Northwest Europe, as a differential to the Brent Weighted Average or BWave: 

Grade        March    Feb  Change 
Extra Light  +1.55  +0.70   +0.85 
Light        -0.85  -1.75   +0.90 
Medium       -2.40  -3.55   +1.15 
Heavy        -4.30  -5.55   +1.25 

To the Mediterranean, as a differential to the Brent Weighted Average or BWave: 

Grade        March    Feb  Change 
Extra Light  +1.45   0.00   +1.45 
Light        -1.10  -2.20   +1.10 
Medium       -2.45  -3.80   +1.35 
Heavy        -4.40  -5.80   +1.40 

To Asia, as a differential to the Oman-Dubai average: 

Grade        March    Feb  Change 
Super Light  +4.20  +4.10   +0.10 
Extra Light  +3.10  +3.55   -0.45 
Light        +1.55  +2.05   -0.50 
Medium       +0.25  +0.75   -0.50 
Heavy        -0.85  -0.45   -0.40 

To the U.S., as a differential to West Texas Intermediate: 

Grade        March    Feb  Change 
Extra Light  +1.85  +2.20   -0.35 
Light        -0.05  +0.25   -0.30 
Medium       -2.15  -1.90   -0.25 
Heavy        -3.75  -3.60   -0.15 
 

-By Gurdeep Singh, Dow Jones Newswires; 65-6415 4064; gurdeep.singh@dowjones.com

(END) Dow Jones Newswires

06-02-12 0927GMT