Singapore : Saudi Arabia is expected to raise prices of all its crudes heading to Asia for October as demand recovers from recent weakness and refining margins improve, after prices fell to 20-month lows, traders said on Wednesday.
A poll of five refiners and traders showed that all expected the top oil exporter to raise official selling prices (OSPs) across the grades.
The Middle East crude market has been pressured over the past two months by increasing competition from Russian ESPO Blend crude, continuous full allocations from Saudi Arabia and weak Asian demand.
The market has rebounded since mid-August after weak prices and wide Brent/Dubai Exchange of Futures for Swaps (EFS) prompted some Oman cargoes to flow outside Asia on an open arbitrage.
Oman value rose to a 90-cent discount to Dubai quotes this week, up from a deep discount of $1.60 (Dh 5.8)in late July.
Front-month EFS for October fell to $1.40 a barrel on Wednesday, down from a 20-month high of $2.75 a barrel on August 4, indicating the close of arbitrage.
"Demand for physical Middle East cargoes has recovered compared with the past few months thanks to improving refining margins," said a trader with a Northeast Asia refiner.
Margins in the Singapore oil hub for Dubai crude run at a complex refinery were at $4.84 a barrel for the past 15 days, up from an average of $3.69 over the past year.
Simple refineries in Singapore showed a profit of $1.92 a barrel over the past 15 days, up from an average of 62 cents over the past year.
