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Fri 3 Dec 2010 10:07 AM

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Saudi Arabia may boost Arab Light to highest since august 2009

Arab Extra Light may be raised by 78 cents setting level at $1.25 premium to benchmarks

Saudi Arabia may boost Arab Light to highest since august 2009
Aramco raised price of Arab Light and Extra Light grades last month for December loading for buyers in Asia(Getty Images)

Saudi Arabian Oil Co, the world’s biggest crude exporter, may raise the official selling prices of all of its January loading supplies to Asia as a surge in processing profits boosts demand for crude.

Arab Light, Saudi Arabia’s largest export type, may be increased by 78 cents from December, according to the median of six responses from officials in a Bloomberg News survey of regional refiners. That would put the price at a premium of $1.15 a barrel to the average of Arabian Gulf benchmarks Oman and Dubai, the highest since August 2009.

Arab Extra Light may be raised by 78 cents, said the officials, who asked to remain unidentified, citing company policy. That would set the level at a $1.25 premium to the benchmarks, the most since June.

A shortage of diesel in China pushed up premiums for cargoes traded in the spot market to three year highs. The supply crunch also help raise processing profits for turning crude into gasoil to $14.32 a barrel on November 15, the highest since January 2009, according to data from PVM Oil Associates.

“The middle of the barrel has remained supported by China’s buying spree of gasoil in response to diesel shortages,” Vienna based consultants JBC Energy GmbH said in their weekly Asian report. “Considering current levels and market fundamentals, we may expect the high price environment to stay around a bit longer.”

Arab Heavy, the country’s densest grade, may climb by 58 cents from December, according to the survey. Arab Medium may also rise by 58 cents, the respondents said.

Increases in Arab Heavy and Medium will be tempered by a widening in fuel oil’s discount to Dubai crude. That price pushed out to minus $7.82 a barrel on November 9, the lowest since May 4. Both grades yield more fuel oil after basic processing.

Saudi Aramco’s Extra Light and Light crudes yield a greater volume of diesel after processing than the company’s other export grades.

Last month, Saudi Aramco raised the price of Arab Light and Extra Light grades for December loading for buyers in Asia.

Arab Light climbed 45 cents to a discount of 5 cents a barrel to the Oman and Dubai average. Extra Light increased 95 cents to a premium of $1.80 and Super Light, the grade with the largest naphtha yield, jumped $1.45 to a premium of $3.35.

Arab Medium rose 20 cents to a discount of $1.60 a barrel to the benchmark’s average. Arab Heavy climbed 10 cents to a discount of $3.10.

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