RIYADH – The Middle East crude market strengthened Thursday, buoyed by larger than expected increases in official selling prices (OSPs) from Saudi Arabia and Abu Dhabi. Top oil exporter Saudi Arabia raised its Arab Light crude price for Asian buyers in November by 90 cents, Saudi Aramco said, higher than traders' forecast of 60 cents a barrel in a Reuters poll. “The strong hikes seen for Asia reflect the wider backwardation in the cash Dubai intermonth spread, which came on the back of increased buying interest from core Asian buyers that are finishing up maintenance,” JBC Energy analysts said in a note. The consultancy expects about 600,000 barrels per day (bpd) of refining capacity to be shut in November compared with more than 1.5 million bpd in the previous month. “At the same time, we expect to see refining capacity additions of around 585,000 bpd in the fourth quarter,” it said. Yet traders were baffled by the 80-cents-a-barrel rise for Arab Medium and Heavy as fuel oil cracks were little changed from the previous month. The larger than expected rise in Saudi OSPs are likely to push up the spot premiums of competing grades such as Oman and Russia's Sokol, ESPO and Vityaz. It could also depress the spot differential for December Banoco Arab Medium, down from the 40-50 cents a barrel premiums fetched for November cargoes. Abu Dhabi National Oil Co. raised the September retroactive official selling price (OSP) for its key Murban crude by $3.75 from August to $115.40 a barrel, ADNOC said. This sets Murban at $4.18 a barrel above Dubai quotes, up $1.12 a barrel in premium from the previous month, more than market's expectation of a 90-cents-a-barrel rise. Murban is still competitive when compared with Saudi grades. With a rally in middle distillates cracks, Murban could still trade at premiums to its OSP for December. – Reuters
