Aramco's Asia-bound Dec crude oil OSP cuts 'fair,' within expectations: traders

Saudi Aramco's cuts to its December crude oil official selling prices for Asia-bound cargoes were well within expectations, with OSPs for the heavier grades seeing smaller cuts due to possible tighter supply for the next two months, Asian traders said Nov. 6.

Aramco in an early Nov. 6 notice cut the December Asia-bound OSP for its flagship Arab Light crude by 50 cents/b on the month to a $1.70/b premium over the average of Platts Dubai and GME Oman prices.

The December OSP for Arab Extra Light and Super Light saw similar cuts of 50 cents/b over the same period, while that for Arab Medium and Heavy saw smaller cuts of 40 cents/b.

"Cuts are generous but from where their OSPs were perched, it’s quite fair," one trader said.

Traders and Asian end-users surveyed by S&P Global Commodity Insights in the lead-up to the OSP release had expected cuts in the range of 40-70 cents/b for Arab Light, with larger cuts of 60-70 cents/b for the lighter AXL and ASL grades and smaller cuts of 20-30 cents/b for the heavier AM and AH.

The cut to the Arab Light OSP was also not far from that implied by the monthly Dubai structure change, one of the factors that Aramco considers when setting its OSPs.

Front-month Platts cash Dubai averaged at a premium of $1.58/b over same-month Dubai futures in October, down 45 cents/b on the month.

Market talk continued about potential field maintenance affecting the supply of some Saudi Arabian crudes -- mainly Arab Medium and Heavy -- for the November and December trading cycles, though this could not be confirmed with Aramco.

A source said these talks were still indefinite and participants would have to await Aramco's crude allocations for December and January-loading cargoes, to be released later this week and in early-December, respectively, for any confirmation.

The outlook for the current January-loading Middle East sour crude cycle was bearish amid market expectations of some traders having excess cargoes to offload this month.

The Platts cash Dubai assessments have started the trading cycle on a much weaker note, with the benchmark spread against Dubai futures languishing at 2024 lows, Commodity Insights data showed.

The front-month cash Dubai spread against same-month Dubai futures averaged at a premium of 65 cents/b for the month to Nov. 5, its lowest for the year compared to prior whole-month averages in 2024.

Nonetheless, the near-term outlook for the region's refiners was expected to improve on the back of the year-end travel and heating demand season, following several months of rock-bottom margins.

Refining margins have risen in recent weeks to touch eight-month highs, with refining officials optimistic of a further recovery in the months ahead.

The Dubai crude Singapore cracking netback margin averaged $4.67/b for the month to Nov. 5, up from an average of $1.65/b in October and 9 cents/b in September, Commodity Insights data showed.