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Singapore: Differentials for Middle East crude continued to creep higher yesterday, with medium and heavy sour grades gaining the most on the back of Opec's second supply cut, traders said.
Middle East sour crude benchmark Oman was not offered or bid actively but traders said the grade was worth a premium to MOG, for the first time since August. The rebound came on the back of talk of deals done at a 1 and a 6-cent discount to MOG for February cargoes late last week.
Traders said refiners have started aggressively buying ahead of the Christmas holiday, with most trading for February loading expected to be over by the end of the week.
February Qatar Marine crude was largely sold out, a trader said, Saudi Aramco's 8-9 per cent cut for January loadings to Asia, and the prospect of lower suppplies for February after Opec decided to cut production by a further 500,000 barrels per day from February 1, were bringing support to the market.
Grades such as Bahrain's Banoco Arab Medium also benefited from the Saudi cut as refiners turned to the grade to compensate for lower supplies of rival Arab Medium crude.
A 35-cent cut in the grade's latest OSP also brought support to Banoco Arab Medium, which a seller assessed at around a 15-cent premium to its OSP.
Heavy sour Al Shaheen crude has also strengthened, with state oil firm Qatar Petroleum (QP) selling 1.8 million barrels of Al Shaheen crude for February loading at narrower discounts of $2.30-2.40 to Dubai quotes, traders said.
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