By Shigeru Sato and Yuji Okada
March 10 (Bloomberg) -- Saudi Aramco maintained cuts in contracted supplies of oil to Japan in April, refinery officials said, fueling speculation OPEC’s largest producer may not urge a further reduction in crude output when the group meets March 15.
The Dhahran, Saudi Arabia-based producer will lower shipments to Japanese processors including Nippon Oil Corp. and Idemitsu Kosan Co. by between 11 percent and 14 percent from levels agreed under annual contracts, said officials at three refiners who received notices from the company late yesterday. The April cuts match the size of the reduction in shipments the previous month, the officials said. They asked not to be identified because of confidentiality agreements.
The Organization of Petroleum Exporting Countries will decide whether to trim the group’s output for a fourth time when ministers gather in Vienna on March 15. Crude oil rose for a third day in New York, trading near the highest levels for two months on signs lower OPEC output is lowering global supplies.
“The Saudis seem to have avoided a deeper reduction in April supplies to Japan, hinting that the kingdom may oppose an additional reduction,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo.
Some Japanese refiners had expected a cut of more than 15 percent in April supplies, the officials said, citing recent sluggish demand for fuels in Asia. April will be the fifth month in which Saudi Aramco’s shipments to Japan have been below contracted levels.
OPEC will announce another cut in production when it meets March 15, said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York. “OPEC has stopped the development of large surpluses and is responsible for a tightening of supply. The signs are that they have already decided to announce an additional cut.”
To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.
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