Saudi to supply full Jan crude volumes to Asia
Saudi Arabia, the world's top crude exporter, will supply similar volumes to its long-term customers in January from December, industry sources said yesterday, on the eve of the latest OPEC meeting on output policy. At least six Asian term buyers and two European refiners expected supplies to be unchanged, implying the Organization of the Petroleum Exporting Countries will once again keep supplies unchanged. The Asian buyers were receiving full contracted volumes as before and the only change was an increase in supplies of more expensive light crude to at least two Asian customers, helping Saudi Arabia to maximize its income.
Buyers in Asia, which has been leading a recovery in demand growth as the world struggles out of recession, have been receiving full volumes since January. In Europe, refiners have also reported mostly steady volumes at lower levels. "For all of this year there have been no big changes," said a source at one European refiner, who said they consistently received "a couple of cargoes". "The allocations are in line with what we asked for. It's unchanged from last month," a source at another European refiner s aid.
OPEC has officially held its output steady since agreeing a record reduction in output in December 2008 when the oil market was crashing towards $30 a barrel, down from a record of nearly $150 hit in July of that year. Its cuts have helped to bolster prices, which this week climbed to a 26-month high of $90.76, and as the market has recovered the producer group has informally raised supplies above its agreed limits.
Saudi Arabian Oil Minister Ali al-Naimi on Nov. 1 said consumers could cope with a $70-$90 price range, marking an upward shift from previous comment $70-$80 was the ideal. On Thursday the group's secretary general, speaking in Quito, where OPEC meets today, said it would only increase supply if fundamentals of supply and demand justified it. "If it goes to $100 due to speculation, OPEC will not move," OPEC Secretary General Abdullah al-Badri told reporters.
By 1040 GMT yesterday, US crude was trading at $88.85, up 48 cents. In line with the bullish tone, Saudi Arabia raised some of the official selling prices (OSPs) for the kingdom's crude to the highest level in more than two years. Asian buyers yesterday said Saudi Arabia made no changes to operational tolerance, which gives buyers the option of asking for cargoes to be loaded with up to 10 percent more or less crude than contracted. Some sources said Asian buyers may use the option to curb loaded volumes n ext month if alternative crudes from other Middle East producers were judged more attractive.