* Arab Light, Extra Light OSPs set to rise for 4th straight
* Firm product cracks, bullish Dubai support
* Arab Heavy may stay unchanged on weak fuel oil
By Ramya Venugopal
SINGAPORE, Dec 4 (Reuters) - Top oil exporter Saudi Arabia
may raise its official selling price for light grades that it
sells to Asia for a fourth straight month in January, driven by
product cracks and a bullish Dubai market, a Reuters poll showed
The producer may raise its official selling price (OSP) for
Arab Light in January by 50 cents from a month ago, according to
the median of estimates of five traders and refiners. It has
raised the price for Arab Light every month since September.
The OSP for Arab Extra Light may increase by 60 cents, while
that for Arab Medium will increase by about 40 cents, the poll
showed. The OSP for Arab Heavy may remain unchanged.
Relatively firm naphtha and gasoil cracks - the profit or
loss made by a refinery by processing crude into specific
products - may lead to higher OSPs for lighter grades, while
weakness in the fuel oil market may result in a steady OSP for
Arab Heavy, traders said.
"Product cracks are looking strong and Dubai is in big
backwardation," said a refiner. "The general view is that prices
should go up, although heavy grades may not be hiked given the
current fuel oil prices."
The front-month Dubai spread
average 80 cents a barrel in backwardation in November, the
highest since March. Immediate prices are higher than those in
future months in a backwardated market, suggesting stronger
demand for near-term cargoes.
Spot premiums for January Middle East crude cargoes rose,
supported by the firm Dubai market, while winter demand from
north Asian refiners such as China and Japan also kept the
market buoyant, a factor that Saudi Aramco is expected to
consider while deciding OSPs.
Distillate cracks were weaker than previous months, but a
recovery at the end of November suggested there could be a pick
up in demand in the new year.
The exception was the continuing weakness in fuel oil cracks
, with the average discount widening to $10.78
from $8.42 per barrel in the previous month.
Saudi crude OSPs are usually released around the fifth of
each month, and set the trend for Iranian, Kuwaiti and Iraqi
prices, affecting some 7 million barrels per day (bpd) of crude
bound for Asia.
Saudi Aramco, the world's biggest crude exporter, sets its
crude prices based on recommendations from customers and after
calculating the change in the value of its oil over the past
month, based on yields and product prices.
Expected Saudi prices for December in Asia (in $/bbl against
the Oman/Dubai average):
Dec Change est. Jan OSP
Arab Extra Light +5.65 +0.50/+0.70 +6.15/+6.35
Arab Light +2.95 -0.45/+0.70 +2.50/+3.65
Arab Medium +0.55 +0.10/+0.50 +0.65/+1.05
Arab Heavy -1.55 -0.95/+0.30 -2.50/-1.25
(Additional reporting by Florence Tan; Editing by Himani