Saudi raises crude selling price for February 

(MENAFN - Bahrain Tribune) Saudi Arabia has hiked the official selling prices of its heavier crude oil grades for February term supply to Asia, possibly setting the stage for further term supply cuts.

Higher prices of heavier grades, which comprise the bulk of exports to Asia, in theory would help Saudi Arabia offset any losses from reduced sales.
Saudi Arabia will announce February term supply allocations shortly, and traders expect the kingdom to deepen term supply reductions in line with the Organization of Petroleum Exporting Countries' decision to further tighten the market.

State-owned Saudi Arabian Oil Co., or Aramco, raised the February OSP of Arabian Medium by 30 cents a barrel to $2.75 a barrel below the average of Oman and Dubai assessments, term lifters said Thursday.
Aramco hiked the February OSP of Arabian Heavy by 50 cents a barrel to a discount of $5.50 a barrel to the same benchmark.
"Maybe they think fuel oil is getting better," a trader at a Chinese oil firm also said.

Fuel oil's crack spread to Dubai for the front month is hovering around minus $14-$15 a barrel, after slumping to minus $17-$18 a barrel a month ago.
With the latest term prices in, market observers are now awaiting Aramco's term supply allocations for February - when Opec's second round of output cuts is to come into effect.

At its latest policy meeting Dec. 14, Opec decided to reduce output by another 500,000 barrels a day from February, on top of a previously pledged 1.2 million barrels a day.

Saudi Arabia has been consistently supplying less crude since Opec's first decision to cut output in October, but its reductions have been within contractual limits that typically allow cuts of up to 10 per cent and have mostly fallen on less wanted heavier grades.

Giving the market the first sign of Opec's further output cut, Abu Dhabi last month told its customers that it will cut February supplies by 3 per cent-5 per cent.

Meantime Saudi Arabia has cut the OSPs of its lighter grades, apparently taking into account the recent weakening of margins on middle distillates, traders said.

"They want to be more competitive," the trader at the Chinese oil firm said.
Abu Dhabi has raised its retroactive OSPs for all of its grades, including its flagship light sour Murban crude, according to a notice overnight.
Aramco has cut its February OSPs of Arabian Light, Extra Light and Super Light by 10 cents, 30 cents and 60 cents to 5 cents, $3.15, and $6.20 a barrel above Oman-Dubai, respectively, lifters said.

With this, the closely watched spread between Arabian Light and Arabian Heavy - a reflection of trends in oil products markets at a given time - has narrowed to $5.55 a barrel from $6.15 a barrel for January.
A narrower spread indicates healthier refining margins.