Tue, May 10, 2011 at 09:10 | Source : Reuters
Saudi Arabia will keep crude oil supplies in June unchanged from May, trade sources said on Monday, amid volatile prices and ahead of an OPEC meeting in June to review the producer group's supply policy.
"They gave us what we asked for, and they always give us the same," one European term customer said.
The oil market often uses supply allocations of Saudi Arabia, the world's top oil exporter with significant spare capacity, to gauge a move by OPEC when the producer group's meeting is imminent.
Early in May, an OPEC delegate said the group might raise supply limit at the June meeting to convince the oil market it wants to bring crude prices down to reverse the impact of fuel inflation on economic growth.
The chief executive of state oil firm Saudi Aramco said late last month it was uneasy with high oil prices and was concerned about their impact on the global economy.
However, a sharp sell off in global commodities markets knocked off Brent crude futures prices by more than USD 16 per barrel last week.
OPEC delegates said they welcomed the slide in prices because high prices may hurt the world economy and in the longer term accelerate the use of alternative fuels.
OPEC, which produces about a third of global crude oil, has left its formal output target unchanged since the pledged ceiling effective January 2009.
Brent was trading around USD 112 a barrel on Monday. US crude was below USD 100. It had been above USD 120 for most of the time since early April, briefly topping USD 127, the highest price since July 2008.
Asia demand on rise
At least six Asian refiners had been told by Aramco they would receive full contracted volumes, trade sources said.
Demand from Asia, where the bulk of Saudi crude is sold, is rising as a peak maintenance season ends in the region while Japanese refineries ramp up output after a massive earthquake and tsunami in March.
JX Nippon Oil and Energy Corp, Japan's top refiner, expects to resume refining operations at its quake-hit 252,500-barrel-per-day Kashima refinery by the end of June. Others have boosted output to fill in supply shortages caused by the natural disaster.
Saudi's crude oil production was 8.5 million barrels per day in April.
A seventh refiner in Asia said it would receive more Arab Light and less Arab Heavy in June, similar to the previous month.
Last week, Saudi Arabia raised the price for Arab Light crude for June to Asian customers more sharply than to European and US buyers.
The Arab Light price, which is expressed in differential to the average of Oman and Dubai crude prices, has been set at the highest premium to be benchmark since 2007, not far from record levels.
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