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Thu 9 Sep 2010 02:57 PM

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Saudi Arabia to keep October oil supplies steady

Supply is 'in line with the nomination and there is no change from last month.'

Saudi Arabia to keep October oil supplies steady
UNCHANGED SUPPLY: Saudi Arabia will keep oil supplies to its long term customers unchanged next month. (Getty Images)

Saudi Arabia, the world's top crude exporter, will keep oil supplies to its long term customers unchanged next month, trade sources in Europe and Asia said on Thursday.

The latest supply allocations are for October, when the Organization of the Petroleum Exporting Countries next meets and is expected to keep existing supply policy unchanged.

One more set of allocations to customers should be issued in early October before OPEC meets on Oct 14.

Trade sources in Europe said they would receive the same contract volumes as for September and that was what they had requested.

Speaking to Reuters, an industry source said: "It's in line with the nomination and there is no change from last month."

Europe based sources in general do not specify how much of their contract they receive.

Half a dozen Asian term buyers will receive full contract volumes for October as they did in September, industry sources said, although one buyer said there had been a slight change in the grades of crude provided.

Saudi Arabia sells five grades to Asian buyers, including the benchmark Arab Light.

The most influential member of OPEC, Saudi Arabia has restored full contracted volumes to most Asian buyers since January, trade sources have said.

The producer group agreed record supply curbs in December 2008, when the oil market fell to little more than $30 a barrel.

As the oil price has recovered, compliance with those limits has slipped to around 50 percent from record discipline of around 80 percent in April and May 2009.

Saudi Arabia, however, is almost in line with its supply target of 8.05 million barrels per day, according to a Reuters survey.

While few expect a formal change in OPEC's output policy, its members could further adjust compliance depending on the pace of economic recovery and its implications for fuel demand.

Iraqi Oil Minister Hussain al Shahristani said on Tuesday there was no reason for OPEC to reconsider production levels.

Shahristani said production levels should be maintained but OPEC should hold an extraordinary meeting if crude prices fell below $70 per barrel.

So far they have held around $75, even though US fuel inventories have hit record levels.

Asian industry sources said Saudi Arabia made no changes to the operational tolerance level in the supply allocations, meaning buyers have the option of asking for cargoes to be loaded with up to 10 percent more or less crude than contracted. (Reuters)

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