ADNOC's OSPs largely within expectations; Upper Zakum slightly higher

Abu Dhabi National Oil Co.'s official selling prices for December-loading cargoes of Upper Zakum, Umm Lulu and Das Blend crude were largely within market expectations, traders told S&P Global Platts.

ADNOC increased Umm Lulu's premium to Murban to 15 cents/b for December, from 5 cents/b in November, deepened Upper Zakum's discount to Murban to 95 cents/b, from 60 cents/b, and kept the Das Blend's discount to Murban unchanged at minus 30 cents/b, Platts reported earlier.

December IFAD Murban's premium to December Dubai futures averaged at $3.44/b in October, compared with $2.22/b in September, Platts data showed.

"Yeah [OSPs are] reasonable, now lighter grades stronger than medium ones," a trader based with a North Asian refinery said.

Most traders were expecting an upside in the OSPs for lighter grades, such as, Umm Lulu, amid strengthening cracks for light-end and middle-distillate products on the month.

"ADNOC OSP's is normal level ... due to the strong LNG and naphtha, light grades higher than heavy is fair," another crude oil trader based in North Asia said.

A seasonal uptick in winter heating fuels, such as, kerosene have also supported demand for light to medium sour crudes, sources said.

Cuts for the heavier Upper Zakum crude were also expected, though some participants said that a deeper cut could have been warranted.

Platts Upper Zakum crude was assessed at an average discount of $1.09/b to Platts Murban crude over the month of October, according to Platts data.

"[Upper Zakum] looks expensive considering the price that market traded last month ... Umm Lulu and Das looks fair, [but] not Upper Zakum," a Singapore based crude oil trader said.

The focus was now on Saudi Aramco's OSPs, which are expected to be hiked amid a stronger market structure for Dubai, Platts reported earlier.

"Think [ADNOC] expects Saudi to adjust to stay competitive, which I think [too] ... that's why they need to cut [Upper Zakum OSP] to stay competitive," a trader based with a South-East Asian refinery said.

Traders also said that the effect of OSP changes was relatively small in the high flat price environment.

"Now flat price at such high level -- OSP [has a] small effect, whether increase or decrease -- the magnitude can't compare to flat price move," the trader with a South-East Asian refinery said. "But [OSP] shows Das grade and Um Lulu are still in very good demand."