- Saudi OSPs to Asia hit 10-month low amid slowing physical demand.
- Saudi Aramco cut on Monday the price of its flagship Arab Light crude for sale in January in Asia by $2.20 per barrel, to a premium of $3.25 a barrel.
- The Saudi oil giant also cut by $1.80 per barrel the price of Arab Light to northwest Europe.
Saudi Arabia has cut the price of the crude it will sell to Asia in January to a 10-month low versus the regional benchmarks which have weakened in recent weeks amid signs of lackluster demand in the world’s most important oil-importing market. Saudi Aramco, the state-owned oil giant, cut on Monday the price of its flagship Arab Light crude for sale in January in Asia by $2.20 per barrel, to a premium of $3.25 a barrel to the regional Oman/Dubai benchmark, off which Middle Eastern term supply to Asia is priced. The cut, to the lowest premium over Oman/Dubai in 10 months, was largely in line with a Reuters survey of refiners and traders in Asia from last week. The Saudi oil giant also cut by $1.80 per barrel the price of Arab Light to northwest Europe, which will be selling in January at a $0.10 discount to ICE Brent. The price to the U.S. remained unchanged. The Saudi cut to prices signals uneasiness about the prospects of oil demand in the key importing region, Asia, where the lockdowns in China have been weighing on market sentiment. Moreover, recent market structures of the key benchmarks have flashed signs of weak demand and sufficient supply, despite the EU embargo on imports of Russian crude oil, which came into effect on Monday. Saudi Aramco, which releases official selling prices (OSPs) for the following month around the fifth of each month, also typically releases the prices after the monthly OPEC+ meeting. At the OPEC+ meeting on Sunday, the alliance decided not to change the production quotas for its members. OPEC+ had agreed in October to cut the collective oil production target by 2 million barrels per day (bpd) beginning in November. The actual cut would be around 1 million bpd, of which Saudi Arabia, which has been trying to produce to quota, will reduce 526,000 bpd of output as of November and will have a target of 10.478 million bpd until OPEC+ decides otherwise. NN: I guess they have not heard the BULLSHIT that China is opening up ending COVID lockdowns…..
China To Cut Gasoline and Diesel Retail Prices Amid Weaker Demand
Chinese news agency, Xinhua, has reported that China’s National Development and Reform Commission will cut gasoline and diesel prices by 440 yuan (about $62.51) per tonne and 425 yuan per tonne, respectively starting Tuesday. Beijing has also directed the country’s three biggest oil companies, namely the China National Petroleum Corporation, the China National Offshore Oil Corporation and the China Petrochemical Corporation to maintain oil production and facilitate transportation to ensure stable supplies. This marks the second consecutive reduction in gasoline and diesel prices since 21st November, a move that will lower the cost for daily and logistics transportation. China’s current pricing mechanism adjusts the prices of refined oil products such as gasoline and diesel if international crude oil prices change by more than 50 yuan per tonne and remain at that level for 10 working days. Brent prices have tumbled 11.3% over the past 30 days (~76.84 yuan per barrel) but have fallen less than 1% since the last cut on November 21, suggesting that China could be buying Russian Urals at big discounts. According to Bloomberg’s oil strategist Julian Lee, Russia’s flagship Urals crude oil traded at a massive discount of $33.28, or about 40% to the international Brent crude oil, at the end of last week, with India and China its biggest buyers. In contrast, a year ago, Urals traded at a much smaller discount of $2.85 to Brent. Urals is the main blend exported by Russia. The result: Moscow is beginning to feel the heat of its war in Ukraine, and could be losing ~$4 billion a month in energy revenues as per Bloomberg’s calculations. Falling fuel prices in China could also signal weakening demand and could eventually hit global oil prices. Experts have warned that China’s zero-Covid policy has been taking a toll on fuel consumption and could remain that way for months. With new Covid restrictions released last month, China’s crude consumption is estimated to fall by 200,000–300,000 b/d in the coming months, though Sunday saw some lockdown curbs walked back due to pressure from protesters. NN: It ain’t over! In fact things will get a lot worse until they get worse. China’s oil consumption will continue to drop. Besides COVID about to run wild their is another issue. Over million barrels of China’s oil consumption that is not consume in China. Its Russian paper barrels that are smuggled into Europe. And it crude that is converted into Distillates that disguise their Russian origin that are turned into distillates that end up in Europe and the USA.