SINGAPORE: The Middle East crude market held steady on Wednesday as official selling price (OSP) announced by major producers were mostly within expectations.
Saudi Arabia raised the official selling prices for its oil deliveries to Asia in April, in line with an improved Dubai market structure over the last month, at the upper range of what traders had anticipated.
Abu Dhabi National Oil Company (ADNOC), on the other hand, raised its February retroactive selling price for crude sold to Asia by less than what the market had expected.
The April OSP for Saudi Arabia's flagship Arab Light crude <ARL-OSP-A> was set at its highest in four months, in a vote of confidence that oil demand is growing in its biggest market following the price crash since June.
The Kingdom raised the price of Arab Light crude supplies to Asia by $1.40 a barrel to $0.25 a barrel above the Oman/Dubai average.
Traders and refiners had expected the April OSP for Arab Light to rise by at least $1 a barrel, a Reuters survey showed. In the previous month, the OSP for Arab Light was set at its weakest in at least 12 years.
Arab Extra Light and Arab Medium OSPs were also raised by $1.40 a barrel, while the price for Arab Heavy was increased by $1.20 a barrel.
"The numbers are within our expectations," a trader with a North Asian refiner said.
"Saudi crude still looks attractive, and they should be able to keep their competitiveness in Asia against other producers," the trader said.
But one Chinese trader said margins in the domestic market were not strong enough to accommodate the hike in Saudi Arabian OSPs, which would force Chinese refiners to cut runs and seek alternative Middle Eastern or Latin American grades.
"There is still lots of oil in the market, so refiners can easily change to alternative grades," the trader said.
ADNOC raised benchmark Murban crude OSP's differential to Dubai rose by 28 cents a barrel from the previous month to $56.55 per barrel, a smaller rise than the 40-50 cents expected by the market.
Chinaoil sold 12 Dubai partials in the window to Shell at $58 a barrel, a trader said.
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