SINGAPORE: The Middle East crude market strengthened on Monday after Saudi Arabia raised the prices of all the grades it will sell to Asia in May for a second straight month and as Chinaoil continued its buying spree.
Three more cargoes were declared for delivery to Chinaoil on Monday, bringing its total purchase in the first three sessions this month to 3 million barrels, traders said.
Unipec will deliver one Upper Zakum and one Oman while Shell will deliver an Upper Zakum, they said.
Saudi Arabia's ability to raise prices for April and May suggested its strategy to fight for market share was working, although stiff competition kept its flagship Arab Light at a discount to Oman/Dubai quotes, analysts said.
"There is still competition for the Asia market, even though it is also a sign that some of the production elsewhere is less able to compete in the market right now," said Shunling Yap, a senior oil and gas analyst at BMI Research.
Saudi Aramco raised the May price of Arab Light for Asian customers by $0.30 a barrel compared with April to a discount of $0.60 a barrel to the Oman/Dubai average, it said on Sunday, in line with market expectations.
Arab Extra Light's May OSP rose by 55 cents on the back of stronger naphtha margins while that for Arab Medium and Heavy saw a smaller increase of 20 cents each due to weaker fuel oil cracks.
Separately, a framework accord to curb Iran's nuclear program forged on Thursday could eventually allow Tehran to reclaim lost ground in the global oil market. Yet the deal all but guarantees that cannot happen before next year.
"A return of 1 mb/d of Iranian oil exports is at least a year away, but 200-300 kb/d of slippage is possible now that the parameters of an agreement are in place," Barclays analysts said in a note. "If the agreement proceeds as planned, we would expect the market to price in that reality beforehand."
Despite the sanctions on Iran, China's imports from the OPEC producer are set to rise from August as a Chinese state trader has signed a deal with the National Iranian Oil Company to buy more condensate.
In Yemen, the government awarded a tender to sell Masila crude for June even as gun battles and heavy shelling raged near the Aden port.
The Masila crude OSP for June was set at a premium of $1.22 a barrel to dated Brent, down $0.01 from the previous month, the Yemeni government said. Unipec UK bought the entire 1.2 million barrels of Masila crude offered by Yemen.
Qatar has raised the March OSP differential to Dubai for Marine crude by 43 cents, higher than spot deals seen last month, traders said. Land crude's OSP differential to Dubai rose by 28 cents.
*DME OMAN
DME Oman for June settled at $54.85 a barrel, down 84 cents, at 0830 GMT. This puts DME Oman at 58 cents below Dubai swaps against a discount of 70 cents in the previous session.
REFINERY
Russia's Gazprom Neft, the oil arm of top global gas producer Gazprom, signed an agreement on Monday to purchase 49 percent of the operator of Vietnam's Dung Quat refinery, the country's sole oil processing facility.
Thailand's third-largest oil refiner IRPC PCL plans to invest 28 billion baht ($862 million) over the next five years, including 10 billion baht in 2015, to expand petrochemical capacity and upgrade its high value added production line.
MARKET NEWS
Libya's Prime Minister Abdullah al-Thinni has said his government would run its own oil sales and deposit revenues abroad in a bid to divert proceeds away from a rival self-declared administration in Tripoli.
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