Reuters reported that top oil exporter Saudi Arabia may increase official selling prices of October crude for Asian clients, as refiners across the continent process more aiming to benefit from attractive margins for products from fuel oil to jet fuel.

All seven traders participating in a Reuters poll project the price of Arab Light will rise with gains expected in a range between 15 and 80 cents to a premium of 90 cents USD 1.55 per barrel to the average of Oman and Dubai quotes.

Expectations that idled refineries will resume production in China and Taiwan, poor economics to ship Atlantic Basin crude to Asia and tighter prompt supplies over the past month triggered a sharp uptrend in valuations for Middle East crude.

Spot cargo premiums have rebound to levels not seen since Saudi Arabia unilaterally boosted oil output towards 10 million barrels per day (bpd) in June. The benchmark Dubai swaps curve shifted from a structure denoting ample supplies, known as contango to the backwardation reflective of a tighter balance.

A trader with a northeast Asian refiner of Saudi crude said that the Dubai benchmark price is quite attractive and everybody has been rushing to buy. Refineries are coming back from maintenance while the tightness in Europe means there are limited imports and cargoes priced off Dubai are even moving into the Mediterranean.

Prospects that Libya will resume oil exports under a new government after a 6 month interruption triggered by civil war have done little to narrow the premium of European benchmark Brent crude to Dubai. A resumption of output in the North African country would weigh on values of Saudi Arab Extra Light and Super Light crudes, for which prices are expected to increase much less than for Arab Heavy and Arab Medium.

(Sourced from Reuters)