Middle East

Saudi Arabia state-owned Saudi Aramco on Thursday informed its term buyers in Asia that it slashed the term price for the flagship Arab Light (AL) OSP by 30cts from the previous month to a premium of 90cts to Dubai/Oman average. Inter-month spreads for the benchmark Dubai papers once again flipped into contango. In addition, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC decided to narrow the supply cuts from August by 2.0 mil barrels per day (b/d), denting expectations of improving demand/supply fundamentals. The scale of the reduction was smaller than the market expectations of 50cts to $1.00 cuts, so that a number of market players believed that the market was unlikely to recover following the OSP pricing.

Africa/Europe/Russia/America

Spot differentials for October-loading Sakhalin Sokol weakened. Demand was weak amid poor crack margins for jet fuel in Asia. In addition, competing arbitrage cargoes like US light grades were offered at attractive prices while freight rates for long-haul cargoes softened, weighing on the evaluations for short-hauled Sokol. India Oil and Natural Gas Corp (ONGC) sold one Oct 10-16 loading Sokol cargo via its sell tender closed on Thursday. The buyer was a trader seen as Vitol. The price was said to be at a premium of 70-80cts to Dubai quotes.

Asia/Pacific

Spot differentials for September-loading Malaysian Kimanis weakened. Weak trends for rival grades reduced the evaluation for Kimanis. The market for Sakhalin Sokol, which some end-users regard as a competing grade for Kimanis, weakened. In addition, trade for Nigerian light grades was slow on sluggish demand. A trader in Singapore pointed out that the fair values for Kimanis should be at premiums of narrower than $3.00 to Dated Brent. In the trade of forward October-loading cargoes, Petronas would take back as much as Malaysian grades to the domestic market to prop up the prices.