Saudi Aramco cuts crude pricing to Asia, U.S. amid weak demand

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Sourse: FuelFix

Saudi Arabia cut pricing for November oil sales to Asia and the U.S.as the world’s largest crude exporter seeks to keep its barrels competitivewith rival suppliers amid sluggish demand.


Saudi Arabian Oil Co. reduced its official selling price for Mediumgrade crude to Asia next month to a discount of $3.20 a barrel below theregional benchmark, compared with a $1.30 discount for October sales, thecompany said Sunday in an e-mailed statement.


The discount for the Medium grade to Asia, the main market for Saudicrude, widened by the most since the state-owned company made a $2 a barrel cutin February 2012, according to data compiled by Bloomberg.


Brent crude, a global benchmark, tumbled almost 50 percent last yearas Saudi Arabia and other OPEC members chose to protect market share instead ofdecreasing output to boost prices.


Brent fell from more than $100 a barrel in July 2014 to less thanhalf that amount six months later and traded below $50 a barrel on average inSeptember.


“They needed to cut pricing to keep Saudi crude competitive withother grades,” Robin Mills, a Dubai-based analyst at Manaar Energy Consulting,said by phone. “Demand has been a bit weaker, leading to the cuts.”


Saudi Arabia will continue investing in oil production even amid thelow prices, Ali Al-Naimi, the country’s oil minister said in a speech inIstanbul, in comments reported by state-run Saudi Press Agency Friday. Volatileoil prices affect investments, creating a situation that’s not good forproducers or consumers, he said.


Saudi Aramco, as the producer is known, widened the discount forArab Light crude to Asia by $1.70 a barrel to $1.60 a barrel less than thebenchmark, according to the statement. The cut was smaller than the medianestimate of a $1.90 a-barrel reduction expected by seven refiners and tradersin Asia surveyed by Bloomberg last week. The decrease was the deepest sinceJanuary.


The company trimmed November pricing for its Light, Medium and Heavygrades to the U.S. by 30 cents a barrel each. Medium crude will sell at adiscount of 85 cents a barrel to the regional benchmark, the widest sinceMarch.


The company raised price levels for the same three grades for buyersin Northwest Europe. It trimmed pricing on Light, Medium and Heavy sold to theMediterranean region.


The Organization of Petroleum Exporting Countries, of which SaudiArabia is the largest producer, decided in December and again in June to keepits production target unchanged at 30 million barrels a day. OPEC has exceededthis official target every month since May 2014.


Saudi Arabia boosted output to a record 10.48 million barrels a dayin June, according to the International Energy Agency. The kingdom pumped 10.3million barrels daily last month as it exited its peak summer period fordomestic demand, data compiled by Bloomberg show.


Middle Eastern producers are competing increasingly with cargoesfrom Latin America, North Africa and Russia for buyers in Asia. Producers inthe Persian Gulf region sell mostly under long-term contracts to refiners.


Most of the Gulf’s state oil companies price their crude at apremium or discount to a benchmark. For Asia, the benchmark is the average ofOman and Dubai oil grades.


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