Saudi Arabia may keep November crude prices to Asia little changed

SINGAPORE (Reuters) - Top oil exporter Saudi Arabia is expected to keep its November official selling prices (OSPs) little changed for Asian buyers in line with Middle East benchmarks, a survey showed on Tuesday.

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Seven people from various Asian refineries expect the November OSP for flagship Arab Light crude to rise by 3 cents a barrel on average from the previous month, a Reuters survey showed.

Five of the seven respondents expect prices to stay unchanged or rise slightly while the remaining two expect prices to fall, the survey showed. Their price forecasts range from an increase of 20-30 cents a barrel to a reduction of 30 cents.

Some of the respondents said small price hikes would track a similar rise in physical Dubai in September from August, one of two benchmarks used by Aramco to set prices. The other benchmark, DME Oman, slipped into a wider discount.

Stronger gasoline and naphtha cracks provided support for Saudi light crude prices, the sources said. NAF-SIN-CRKGL92-SIN-CRK

However, high product inventories in key markets like China and mobility restrictions in response to rising COVID-19 cases are likely to cap fuel demand and squeeze refiners’ margins, they added.

Even if Aramco cuts prices, some refiners would still be running at a loss because of poor diesel margins, one of the respondents said.

Saudi crude OSPs are usually released on 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 2222.SE 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.

Saudi Aramco officials as a matter of policy do not comment on the kingdom’s monthly OSPs.

Below are expected Saudi prices for November (in $/bbl against the Oman/Dubai average):OCT Change est.NOV OSP

Arab Extra Light -0.80 -0.20/+0.30 -1.00/-0.50

Arab Light -0.50 -0.30/+0.30 -0.80/-0.20

Arab Medium -0.30 -0.30/+0.30 -0.60/0.00

Arab Heavy -0.30 -0.30/+0.30 -0.60/0.00

Source: Reuters, trade

Reporting by Shu Zhang and Florence Tan; Editing by Susan Fenton