SINGAPORE- Saudi Arabia, the world's top oil exporter, plans to reduce light crude oil supplies to Asian customers for cargoes loading in March, three sources with knowledge of the matter said on Tuesday.

Unlike previous months, the producer is expected to stop giving additional supplies of Arab Extra Light crude to refiners on top of their contractual volumes, they said.

"Saudi Arabia may be in a tight position for Arab Extra Light. They usually can supply incremental volumes but this month there is no room for additional capacity," one of the sources said.

State oil company Saudi Aramco could not be immediately reached for comment.

The move has improved demand for light sour crude such as Abu Dhabi's Murban and Das in Asia's spot market, narrowing discounts seen for these grades, several traders said.

For example, April-loading Murban crude traded at a discount of 20 cents a barrel against its official selling price (OSP) earlier this month, but that has narrowed to close to parity late last week, they said.

Still, some of the traders expect the recovery in spot prices for light crudes to be temporary as months of slow demand for these grades have built up supplies in Asia while arbitrage supplies from the United States continued to head east.

"There is still a lot of oil available and people who needed to buy have already covered their demand," one of the traders said.

On the whole, Saudi Aramco will supply full contractual volumes to several refiners in Asia despite deeper cuts in its production and exports in March, several sources with knowledge of the matter said.

This meant that the producer would have to reduce exports to Europe and the United States, they added.

Saudi Energy Minister Khalid al-Falih told the Financial Times earlier this month that it plans to produce around 9.8 million barrels per day (bpd) of oil in March, over 500,000 bpd below its pledged production level under a global supply-cutting deal. Exports would fall in March to 6.9 million bpd, he said. 

(Reporting by Florence Tan Editing by Christian Schmollinger) ((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters Messaging: florence.tan.thomsonreuters.com@reuters.net))