CRUDE MOC: Middle East spreads tick lower, signal deeper price cuts for May, June

Singapore — Middle East sour crude differentials ticked lower Monday at the end of the Platts Market on Close assessment process, as the crude market in Asia signaled deeper price cuts for Middle East producers following a second round of lower prices offered by Saudi Aramco to its Asian customers.

Saudi Aramco again slashed official selling prices for its crude headed to Asia for a second consecutive month, even after marathon talks that led to the historic output cut by OPEC and other nations, according to a pricing letter seen by S&P Global Platts.

Aramco's cuts for Asia are likely to be emulated by other producers, crude traders in the region said. Middle East sour crude grades traded on the spot market would be heavily discounted if OSPs were not cut in parallel with those of OPEC's top producer, they added.

Prices for lighter, typically more premium, crude grades are also expected to see heavy cuts, with spot differentials for grades such as Murban, Das and Qatar Land valued well below minus $2/b against their respective OSPs for the June trading cycle, traders said.

The Murban OSP differential was assessed at minus $2.25/b on Monday, while that for Qatar Land was assessed at minus $2.65/b and for Das Blend at minus $2.50/b.

In comparison, OSP differentials for medium and heavier crude grades saw shallower discounts, with the Upper Zakum OSP differential assessed at minus $1.50/b Monday, while Banoco Arab Medium was assessed at minus 50 cents/b.

Saudi Aramco set the OSP differentials for its Arab Extra Light, Medium and Heavy crudes headed to Asia in May at the same level of minus $7.40/b, crunching quality premiums for its lighter crude grades against heavier ones.

During Monday's MOC, eight June Dubai partials changed hands, bringing the total partials count for the month so far to 37. Of these, six were Oman partials.