Saudi Aramco allocates full February term volumes to most Asian buyers: sources

Saudi Aramco has allocated full February term crude volumes to most Asia-Pacific refiners following the issuance of its official selling prices last week, refinery sources in China, Japan, Malaysia, Taiwan and India told S&P Global Platts Jan. 11.

In a trend witnessed over the past few months, refiners were expecting the Middle East's largest producer to provide full volumes in line with an increase in production by the OPEC+ alliance.

"Everyone has received full allocations," a trader with a North Asian refinery said.

However, refiners were heard to have avoided asking for incremental volumes as a lesser-than-expected cut in OSPs by the producer made term crude more expensive.

Last week, Saudi Aramco issued its February OSPs with a cut of $1/b-$1.30/b for its Asia bound grades, lower than expectations of a cut in prices by $1.50/b-$1.80/b, sources said.

This, sources said, could boost sentiment for March-loading spot trade which is expected to kick off in the next few days.

"Yes, [market has] been strengthening since last week," a trader with a South East Asian refinery said.

In January so far, the Dubai cash/futures spread averages $1.81/b compared to $1.52/b for the whole of December, Platts data showed.

The growing spread of the omicron variant in key economies such as India and China, however, could cap import appetite, market sources said.

"Market was over optimistic about omicron [and] hospitalizations are growing. Can't shrug it off completely," a trader in Singapore said.

More lighter crudes pushed to buyers

Term buyers were also heard to have received more lighter crude grades such as Arab Light compared to other Saudi grades such as Arab Heavy and Arab Medium, traders said.

"I wonder if people get exactly same grade ratio/volume as nominated. I heard some get more AL [Arab Light and] less others [grades]," the trader with the Southeast Asian refinery said.

More production of lighter grades could be a reason for the producer to allocate buyers with the grades while routine maintenance work could be a reason for capped supplies of the Arab Heavy grade, sources said.

"Just supply ample [for lighter grades], I think," another trader with a North Asian refinery said. "AH [Arab Heavy] I heard some maintenance, but not big."

"I think Saudi is flowing with Arab Light as per their allocation of lights [crude oil]," a trader with a South Asian refinery said.

Buying interest for lighter crude grades is expected to be strong this month compared to the medium, sour and heavy, sour crude grades amid stable demand cues and cracking margins, traders said.