The price cuts reflects lower crude demand in Asia
Saudi to cut August medium, heavy crude oil prices
SINGAPORE, July 1, 2015
Top oil exporter Saudi Arabia is expected to cut monthly prices for medium and heavy grades it sells to Asia in August on weaker fuel oil cracks, while keeping the price for its flagship light crude little changed, traders said.
The Arab Heavy crude price could fall as much as 70 cents a barrel in August while Arab Light could post a small drop of up to 20 cents, a survey of four refiners and traders said.
"The fuel oil crack is not as strong as last month so the spread between light and heavy crude may widen," a trader with a North Asian refiner said.
The price cuts reflects lower crude demand in Asia as refining margins weakened. Opec's supply, at the highest in three years in June, also weighed on the market.
Opec supply has risen in June to 31.60 million bpd from a revised 31.30 million bpd in May due to record or near-record output from Iraq and Saudi Arabia, a Reuters survey found.
Sour crude for August loading came under pressure last month as refining margins weakened while Japan's sale of 4.15 million barrels of crude from its strategic reserves added to spot supply.
Complex refining margins in Asia slid to around $7 on a 5-day average on weaker profits for naphtha, gasoline and fuel oil, although the average for June stayed close to that for May.
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.
--Reuters
