OIL FUTURES: Crude declines as Aramco cuts OSPs to Europe, US, and Asia

Crude oil futures fell in mid-morning European trading Dec. 6 as market participants took Saudi Aramco's cut in its official selling prices as a sign of weak demand.

At 1115 GMT, the ICE February Brent futures contract was trading at $76.44/b, down 76 cents/b from the previous close, while January NYMEX light sweet crude fell 80 cents/b to $71.52/b.

Saudi Arabian state-owned energy group Aramco cut the January OSP differentials for all its crude grades bound for Europe, the Mediterranean, and the US from the previous month, according to a company notice seen by S&P Global Commodity Insights Dec. 6.

Aramco reduced the OSP differentials for all its Europe-bound and Mediterranean-bound crude grades by $2/b on the month.

Flagship grade Arab Light's January OSP differential was set at a premium of $2.90/b to ICE Brent to Europe and at a premium of $2.40/b to the Mediterranean.

To the US, the OSP differential for Arab Light was set at a premium of $7.15/b to ASCI.

Aramco cut Asia-bound January OSP differentials for all its crude grades by 30-60 cents/b, several market participants said Dec. 6.

Aramco set the January OSP differential for its flagship Arab Light at a premium of $3.50/b to the Oman/Dubai average, down 50 cents/b month on month.

In the US, crude stocks rose 594,000 barrels in the week to Dec. 1, American Petroleum Institute data showed. Gasoline inventories rose 2.8 million barrels during the period, while distillate stocks fell 89,000 barrels.

"[The build adds] concerns about demand deterioration in the world's largest economy," Phillip Nova Senior Market Analyst Priyanka Sachdeva wrote in a Dec. 6 note.

The more heavily followed Energy Information Administration weekly data figures will be published later on Dec. 6.

The WTI futures six-month calendar spread was trading in a contango structure, underlining expectations of a weak market in the US.

Meanwhile, India's insatiable appetite for Russian crude had slowed due to a rise in Middle Eastern flows, widespread refinery maintenance and increased scrutiny on ships carrying Russian oil, but inflows are likely to bounce back in coming months and help the largest non-OPEC exporter maintain its position as the country's top supplier in the foreseeable future.

After rising to an all-time high of 2.1 million b/d in June and remaining as high as 1.69 million b/d in September, imports of Russian crude by Indian refiners have shown a declining trend in recent months.

According to S&P Global Commodities at Sea data, Russia remains India's primary crude oil supplier, accounting for about 33% of the total crude imports, or 1.51 million b/d, in October, and 35% of the total crude imports, or about 1.55 million b/d, in November.