Middle Eastern benchmarks traded mixed on Monday despite the affirmation of production trim from Saudi Arabia and Russia, as the market was concerned that the sagging refining margins and weakening demand from China would put a lid on oil prices.
Spot premiums for Oman and Dubai edged lower, while Murban increased for a second session following an unexpected price hike on Arab Extra Light crude.
Top oil exporters Saudi Arabia and Russia confirmed on Sunday they would continue with their additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to weigh on crude markets.
China’s oil refinery utilisation rates are easing from record third-quarter levels as thinning margins and a shortage of export quotas discourage plants from raising output for the rest of 2023, according to traders and industry consultancies.
The drop in refining output could reduce crude demand from the world’s top importer and cap global oil prices, pushing up China’s crude inventories and dampening prices from top supplier Russia.
OSP
Saudi Aramco has kept its December Arab Light grade official selling price (OSP) for Asian customers unchanged from the prior month, pausing a five-month price hike cycle, a company statement showed on Monday.
The Middle Eastern oil kingpin set the OSP for Arab Light at $4 a barrel over the Oman/Dubai average, the same premium as November.
SINGAPORE CASH DEALS
Cash Dubai’s premium to swaps dipped 6 cents to $1.95 a barrel.
NEWS
U.S. energy firms this week cut the number of oil and natural gas rigs operating to their lowest since February 2022, energy services firm Baker Hughes BKR.O said in its closely followed report on Friday.
The British government plans to legislate to mandate annual North Sea oil and gas licensing rounds, in a move Prime Minister Rishi Sunak says would create certainty for the industry during a transition to greener energy.
The U.S. House of Representatives easily passed a bill on Friday to bolster sanctions on Iranian oil in a strong bipartisan vote.
Source: Reuters (Reporting by Muyu Xu; Editing by Shailesh Kuber)