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Singapore: Saudi Arabia will likely cut the price of its heaviest, fuel-oil rich crudes to Asian buyers for April as the fuel oil crack has weakened, traders said yesterday.
Heaviest Arab Heavy crude could bear the brunt of the cuts. Its discount to Oman/Dubai could widen by up to 60 cents to a $5.20 discount, as Saudi Arabia is considered unlikely to further cut exports to Asia, traders added.
"For heavy crude, they will consider the weak fuel oil margins," a trader with a North Asian refiner said.
"They will keep medium grades steady since middle distillates are not too bad. The lightest grades should reflect the bullish naphtha crack," he added.
The front-month fuel oil crack to Dubai swaps has weakened by some $1.15 in February from January, as the tightening of supplies felt in January ahead of the Chinese New Year has eased, Reuters data show.
The gas oil crack to Dubai crude has remained largely steady from January, up only 15 cents to a $14.51 average for February. But the surge in naphtha prices, with the premium to Brent hitting a three-year high last week, is likely to push product-rich Super Light and Extra Light crude higher, especially as rival light sour Abu Dhabi crude made a recovery in late February.
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