December 15, 2015 / 6:46 AM / 4 years ago

CORRECTED-Saudi Arabia shipping more Nov-Dec crude to Asia to meet robust demand

(Corrects to say Asian customers received about 4.2 million bpd, up 2.7 percent, not 4.6 million bpd in paragraph 7)

* Attractive pricing, strong margins boost Saudi oil demand

* Saudi raises supply to Asia by a few million barrels - source

By Florence Tan and Osamu Tsukimori

SINGAPORE/TOKYO, Dec 8 (Reuters) - Saudi Arabia is shipping more crude oil to Asia over the last two months of the year as strong refining margins boost demand, trade sources said, helping the top oil exporter defend its market share amid fierce competition.

Cheap Saudi oil - in comparison with prices for other Middle Eastern grades - has drawn several Asian refiners to request a few million barrels above contractual volumes as they ramp up crude run rates to capture robust margins.

The increment in demand will require Saudi Arabia to pump at near record volumes just as a battle over global market share is expected to intensify following the failure of the Organization of the Petroleum Exporting Countries (OPEC) to set a production quota, and ahead of higher exports from Iran next year once sanctions over its nuclear programme are lifted.

“There is a bigger call for Saudi crude as monthly supply nominations from Asian refiners have gone up,” said an industry source familiar with the matter, adding that the kingdom will raise shipments to Asia by a few million barrels over November and December.

The trend may continue into early next year as a drop in exports from key light sour producer Abu Dhabi has increased demand for Saudi grades of a similar quality.

Saudi Aramco declined to comment.

Nearly half of Saudi’s crude production is exported to Asia. Saudi Arabia’s major Asian customers received about 4.2 million barrels per day (bpd) of crude in the first 11 months this year, up 2.7 percent from the same period a year ago, data from Thomson Reuters Research & Forecasts showed.

Saudi Arabia last raised oil exports to Asia over contract volumes in January and February this year to meet peak winter demand in the Northern Hemisphere. The OPEC member’s offers of extra crude in low-season October, however, failed to attract interest from Asia.

Demand for Saudi crude picked up again in November and December as refining margins rebounded.

At least four Asian refiners lifted more crude as Saudi Aramco set more competitive official selling prices (OSPs), sources close to the matter said.

Under oil contracts, the seller or buyer can adjust loading volumes, depending on demand and shipping logistics, using an operational tolerance that ranges from plus to minus 10 percent of the contracted volume.

“The OSP is not bad and the (refining) margin is wonderful,” said a trader with a North Asian refiner that has requested more Saudi crude.

Saudi Aramco’s Arab Extra Light OSP is about $7 a barrel below Abu Dhabi’s Murban, the widest discount since August.

(See graphic)

Light sour crude supply is expected to tighten early next year as Abu Dhabi National Oil Company has cut Murban and Das crude exports on field maintenance and higher domestic demand.

Light crudes typically yield more light products such as naphtha, whose crack to Brent NAF-SIN-CRK averaged $111.93 a tonne in November, the highest since September 2014.

This helped boost refining margins at a typical complex refinery in Singapore to the highest in eight months in November.

Taking the strong refining margins in Asia into greater consideration, Saudi Arabia cut its January OSPs for most of the crude grades it sells to Asia by a smaller extent than expected last week.

Asian refiners are now waiting for other Middle Eastern producers to set their prices before deciding on how much Saudi crude to ask for in January, sources said.

Editing by Tom Hogue

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