April 5 (Bloomberg) -- Saudi Aramco, the world’s largest state-owned oil company, raised official selling prices for light crude grades for customers in the U.S. and Asia for May. Abu Dhabi raised its retroactive March prices on all grades.
The state-owned Saudi Arabian producer increased the formula price of its Arab Super Light crude to Asia the most, by $1 a barrel to $2.10 more than the Persian Gulf benchmark, according to an e-mailed statement late yesterday.
Aramco set the price for its Extra Light crude oil for May loadings for U.S. buyers at a premium of $1.35 a barrel over the Argus Sour Crude Index, 40 cents higher than for April. The discount for shipments of Light crude to the U.S. narrowed 20 cents to 40 cents less than ASCI a barrel. Aramco cut prices on heavy and medium grades to the U.S. and Asia and lowered all crudes to Europe.
Abu Dhabi National Oil Co., or Adnoc, the state-owned producer from the United Arab Emirates capital, raised March crude selling prices more than 5 percent, to the highest since November.
Saudi Arabia was the fourth-biggest exporter of crude to the U.S. last year, dropping from second place in 2008, according to data from the U.S. Energy Information Administration. Canada, Mexico and Venezuela all shipped more crude to the U.S., the data show.
Pricing Against ASCI
The U.A.E., holder of almost 8 percent of the world’s oil reserves, is the fourth-largest producer in the Organization of Petroleum Exporting Countries, pumping 2.3 million barrels of crude a day in March, according to a Bloomberg survey. The federation, which exports most of its crude to Asia, has the capacity to produce about 2.8 million barrels a day, Oil Minister Mohamed Al-Hamli said March 2.
Some producers, like Saudi Arabia and Iraq, announce price formulas as a premium or discount applied to a benchmark to determine the cost of oil sold in coming months. Abu Dhabi announces prices for crude lifted the previous month based on market conditions, demand and producer and exchange prices.
May marks the fifth month Dhahran-based Aramco is pricing crude for the U.S. against the ASCI marker, an index of high- sulfur oil produced in the Gulf of Mexico. The benchmark replaces a West Texas Intermediate crude price published by Platts, the energy-information division of McGraw Hill Cos. WTI oil, a lighter, more expensive crude grade, also trades as a futures contract on the New York Mercantile Exchange.
Medium Crude
The price of Medium crude to the U.S. dropped 10 cents to $2.20 a barrel below ASCI, while the heavy crude price fell 30 cents to a $3.60-a-barrel discount, Aramco said.
Abu Dhabi, holder of most of the U.A.E.’s oil resources, increased the price for Murban crude, its largest export grade, to $78.30 a barrel, Adnoc said in an e-mailed statement today. Lower Zakum crude rose the most, adding $4.20 a barrel, or 5.7 percent, to $78.15 a barrel.
Adnoc raised the price for Upper Zakum crude by $3.70 a barrel, or 5.1 percent, to $76.25 a barrel for March, the smallest margin of increase. Umm Shaif crude rose 5.6 percent to $77.80 a barrel, according to the statement.
Saudi Arabia, the largest OPEC member and the group’s de- facto leader, has led production cuts announced in 2008 to support crude prices. OPEC decided at a March 17 meeting in Vienna to leave output quotas unchanged. Most OPEC members are exceeding their quota to take advantage of prices that rallied 78 percent last year.
Asia Demand
The Persian Gulf state was one of four OPEC members with production limits to cut crude output in March, according to Bloomberg estimates. Saudi Arabia pumped 8.2 million barrels a day last month, 50,000 barrels a day less than in February and almost 200,000 more than its OPEC quota. U.A.E. production was 20,000 barrels a day higher in March, according to the survey.
Aramco raised the price of Super Light crude to Asia for a second month. Extra Light and Light crudes to Asia rose after three months of cuts, while Medium and Heavy crudes priced lower.
Saudi Arabia, which has joint-venture refinery projects in China, is seeking to strengthen its role as a supplier to Asia as demand from the U.S. and Europe slipped with the global financial crisis. The biggest oil exporter agreed in February to raise crude supply to India to 40 million tons a year, or about 770,000 barrels a day, from 25.5 million tons a year, India’s Oil Ministry said in a statement after a meeting between the top crude officials from both countries.
The exporter has supplied full crude volumes to refiners in Asia since December. It lowered prices on most crude grades for shipment to Asia in February, March and April.
Adnoc increased the amount of oil it sells under long-term contracts to Asian refiners for May, the company said on March 25. Murban shipments will be reduced by 13 percent in May and Umm Shaif shipments will be 10 percent lower than contracted amounts, compared with 15 percent cuts on both grades in April.
Upper Zakum will be increased to full contracted supply from a 5 percent cut for April, while Lower Zakum exports will decline, being curtailed by 15 percent of contractual volumes from 10 percent in April.
--With assistance from Christian Schmollinger in Singapore. Editors: Torrey Clark, James Kraus
To contact the reporters on this story: Anthony DiPaola in Singapore at adipaola@bloomberg.net
To contact the editors responsible for this story: Stephen Voss on sev@bloomberg.net
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