Aramco raises oil pricing for Asia in sign of greater demand

  • Business
  • Wednesday, 06 Sep 2017

DUBAI: Saudi Arabia raised oil pricing for October sales to Asia, increasing its lighter grades for a second consecutive month, in an indication the world’s largest crude exporter sees strengthening demand in its biggest market.

State-owned Saudi Arabian Oil Co, known as Saudi Aramco, increased its official pricing for Arab Light crude to Asia by 55 cents to 30 cents a barrel more than the regional benchmark, it said on Monday in an emailed statement. The company had been expected to raise pricing by less than that, according to a Bloomberg survey.

“The increase is indicative of strength in the Asian market,” Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy, said by phone.

The impact of storm Harvey in the Gulf of Mexico, which cut US refining output and drove up gasoline prices, could also have driven to larger-than-expected gains in the Saudi pricing for light crudes to Asia, Mills said.

Potential US demand for imported fuel could boost refining profits in Asia, he said. Opec’s biggest producer is cutting shipments as part of its pledge to curb output, together with other major producers, to shrink a global glut.

Aramco is trimming sales to Asia for September, with the reductions across grades, people with knowledge of the matter said last month. It will curtail sales of its Arab Extra Light crude through October on field maintenance, others said last week.

Benchmark Brent crude has dropped about 8% this year on signs that global supply still outweighs demand, eroding optimism that the cuts by the Organisation of Petroleum Exporting Countries and other producers can bolster the market.

Russia is likely to back a further extension of the producers’ agreement, judging that it has helped to stabilise the market, Arkady Dvorkovich, the country’s deputy prime minister, said in an interview with Bloomberg TV.

It’s still too early to make a definitive decision on prolonging the cuts, which run through March 2018, he said.

“Refining margins in Asia have been strong,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd, speaking last week of the expected pricing increase. “It’s a sign of stronger demand.”

Aramco’s increase for October pushes Arab Light for Asia to a premium for the first time since March and to the highest level this year, according to data compiled by Bloomberg.

It was expected to raise pricing by 35 cents a barrel to a premium of 10 cents to the benchmark for Asia, according to the median estimate in a Bloomberg survey of six refiners and traders. — Bloomberg

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