By Anthony DiPaola - Mar 5, 2011 11:46 PM GMT+0700
Saudi Aramco, the world’s largest oil exporter, raised official selling prices for all crude grades for customers in Asia and Northwest Europe for April shipments and cut prices for customers in the U.S.
Saudi Arabia’s state-owned producer increased the formula prices for Arab Extra Light, Light and Medium crudes to Asia by 65 cents a barrel, a person familiar with the pricing decision said today. Arab Light to Asia will sell at the highest since July 2008 at $1.95 a barrel above the average of the Oman and Dubai grades, the two Gulf benchmarks used by traders.
Six officials at refineries in Asia polled by Bloomberg said they expected a price increase reflecting gains in fuel processing profits. The difference between gasoil and fuel oil prices, the so-called black-white spread, rose to the widest since 2008, suggesting refiners with the ability to break fuel oil into higher value oil products are earning more.
Arab Super Light to Asia will increase by 25 cents a barrel, to $6.05 a barrel above the Oman and Dubai average and Extra Light will rise to a $3.95 a barrel premium.
Aramco set the price for its Extra Light crude oil for April loadings for U.S. buyers at a premium of $2.60 a barrel over the Argus Sour Crude Index, 10 cents lower than March cargoes. The price of Arab Light crude to the U.S. will be at parity with the Argus index, 30 cents a barrel lower than March.
Oil Climbs
Crude oil for April delivery rose 2.9 percent during February on the New York Mercantile Exchange to close at $96.97 a barrel on Feb. 28. Oil is up more than 20 percent since unrest flared up in Libya in the middle of last month.
Clashes over the last two weeks between government troops and forces opposed to Libyan leader Muammar Qaddafi have slashed oil exports from the North African country. Concern protests may spread to another Middle East producer, such as Algeria, is keeping oil at its highest price in almost two and a half years.
Saudi Arabian Oil Minister Ali Al-Naimi on Feb. 22 said his country and other Organization of Petroleum Exporting Countries members would be ready to counter “any disruption anywhere in the world” by pumping more crude.
Aramco this week offered European refiners additional cargoes of Arab Light crude for loading this month, two officials involved in the negotiations said. The official prices for light grades to Northwest Europe and the Mediterranean Sea gained as oil prices rose and as lighter Libyan crudes were taken out of the market.
2008 Cuts
As OPEC’s biggest and most influential producer, Saudi Arabia had led the group’s supply cuts in late 2008 to support prices. At its most recent meeting in December, OPEC left unchanged the official production quotas that most members are now exceeding anyway to take advantage of higher prices.
Saudi Arabia pumped 8.43 million barrels of oil a day last month, 25,000 a day more than in January and about 375,000 barrels a day above its OPEC quota, according to Bloomberg estimates. Jamie Webster, an analyst at PFC Energy in Washington, estimates the country is now pumping more than 9 million barrels a day.
A month ago, on Feb. 2, Aramco had cut most of its official selling-price differentials for crude shipments in March, raising only the price formulas for cargoes to the U.S.
For U.S. shipments, Aramco has priced its crude since January 2010 against the ASCI marker, an index of high-sulfur oil produced in the Gulf of Mexico, replacing a lighter crude benchmark of West Texas Intermediate priced by Platts, the energy-information division of McGraw Hill Cos. WTI also trades as a futures contract on the New York Mercantile Exchange.
The following table gives the differentials of the four regions in relation to benchmark prices, the month-on-month change and the degrees of gravity as defined by the American Petroleum Institute. Prices are in U.S. dollars a barrel.
*T United States
Variety API April March Change Extra Light 38.5 +2.60 +2.70 -0.10 Arab Light 32.5 0 +0.30 -0.30 Arab Medium 31 -2.20 -1.85 -0.35 Arab Heavy 27 -3.90 -3.65 -0.25 ----------------------------------------------------
Prices for customers in the U.S. expressed as a differential against Argus Sour Crude Index published by Argus Media Ltd.
Variety API April March Change Super Light 50.6 +6.05 +5.80 +0.25 Extra Light 38.5 +3.95 +3.30 +0.65 Arab Light 32.5 +1.95 +1.30 +0.65 Arab Medium 31 -0.45 -1.10 +0.65 Arab Heavy 27 -2.55 -3.05 +0.50 --- --------------------------------------------------
Prices for customers in Asia are expressed as a differential against the average of Oman and Dubai grades, the two Arabian Gulf benchmarks used by Asian oil traders. The Dubai and Oman price assessments are published by Platts, the energy- information division of McGraw-Hill Cos.
Northwestern Europe
Variety API April March Change Extra Light 38.5 -1.10 -1.75 +0.65 Arab Light 32.5 -3.40 -4.20 +0.80 Arab Medium 31 -5.90 -6.10 +0.20 Arab Heavy 27 -8.45 -8.55 +0.10 ---------------------------------------------------
Mediterranean
Variety API April March Change Extra Light 38.5 -1.60 -3.15 +1.55 Arab Light 32.5 -3.75 -4.75 +1.00 Arab Medium 31 -7.70 -7.30 -0.40 Arab Heavy 27 -10.05 -9.70 -0.35 ---------------------------------------------------
Prices for Northwest European and Mediterranean customers are expressed as a differential against the Brent weighted average posted by Intercontinental Exchange, free on board Ras Tanura.
To contact the reporters on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.
To contact the editors responsible for this story: Stephen Voss on sev@bloomberg.net.
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