Top oil exporter Saudi Arabia is expected to increase its August official selling prices (OSPs) for Asia for the second straight month, tracking stronger crude benchmarks, a Reuters survey showed.
Sources at four Asian refiners on average expected the August OSP for Saudi flagship grade Arab Light to rise by 65 cents a barrel, with their forecasts ranging between 50 cents to 70 cents.
Their forecast tracked the price strength in Middle East crude oil benchmarks Cash Dubai and DME Oman, which in June saw their premiums to Dubai swaps up by about 70 cents from May.
In June, Asia’s refining margin for gasoline has averaged at $5.40 per barrel, 12% lower compared with an average of $6.16 per barrel last month, while the naphtha crack has slightly increased.
Asia’s jet fuel cracks have averaged $5.88 per barrel in June, 2% lower compared with $6 a barrel in May, while the gasoil cracks have averaged $8.33 per barrel this month, about 2.5% higher from the May-average.
Asia’s crack for front-month very low-sulphur fuel oil (VLSFO) in June averaged at $11.90 a barrel above Dubai crude, up by 70 cents from May’s average, as gradual inventory declines eased concerns of oversupply.
The market’s attention is now on the July 1 meeting of the Organization of the Petroleum Exporting Countries and its allies led by Russia, together known as OPEC+. Sources and market watchers have said they expect the group to discuss a further gradual easing of existing oil production curbs from August.
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.
Below are expected Saudi prices for August (in $/bbl against the Oman/Dubai average): JULY Change est.AUG OSP Arab Extra Light +1.90 +0.60/+0.70 +2.50/+2.60 Arab Light +1.90 +0.50/+0.70 +2.40/+2.60 Arab Medium +1.35 +0.40/+0.90 +1.75/+2.25 Arab Heavy +0.40 +0.20/+1.00 +0.60/+1.40 Source: Reuters, trade
Source: Reuters (Reporting By Shu Zhang, Additional Reporting by Florence Tan, Roslan Khasawneh and Koustav Samanta; Editing by Robert Birsel)