SINGAPORE: The Middle East crude market held steady on Monday as traders looked ahead to next week when trade in August-loading cargoes will begin.
Most Middle East producers have raised their official selling prices (OSP) this month amid a stronger Dubai market as steeper backwardation signalled stronger prompt demand.
The latest producer to do so was Qatar, setting the May retroactive OSP for its Marine crude at $106.45 a barrel, up $1.25 a barrel from the previous month.
However, the rises were steeper than expected, traders said, with some expecting spot cargoes to begin trading at a small discount, citing weaker refining margins.
"The rise (in OSPs) is higher than we had expected, especially for the heavier grades," said a trader with a North Asian refiner.
"Crude demand is stronger compared to last month, but we're expecting a small discount for August cargoes," the trader said, pointing to a weak market outlook for light oil products such as naphtha.
Last month, a reduction in OSPs, Brent's widening premium to Dubai crude and a recovery in Asian crude demand as refiners return from maintenance had boosted premiums for Middle Eastern grades.
Traders were awaiting OSP announcements from Iran and Kuwait due later this week.
Revamping a PetroChina subsidiary refinery to process sour crude is taking months longer than expected, cutting the firm's crude oil purchases from Saudi Arabia, two industry sources said.
PetroChina Guangxi Petrochemical, which operates a 200,000-bpd refinery in the southern coastal city of Qinzhou, was earlier expected to finish a retooling programme by around April to start processing high-sulphur Saudi oil, but that is being delayed until August at the earliest, the sources said.
Chinese imports of Saudi crude oil dropped 13 percent in the first four months of the year.
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