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Algerian oil prices rise after exports to Venezuela

Algerian oil prices rise after exports to Venezuela

Posted by Dubraswka Aguilar on October 29, 2014

Algeria raised its oil price for November to the highest in five months after adding Venezuela, fellow OPEC member and holder of the world’s largest crude reserves, to the list of its mostly European customers.

The North African country will sell its Saharan Blend crude at a premium of 70 cents a barrel to Dated Brent, the benchmark for more than half of the world’s oil, according to a price list obtained by Bloomberg. That’s the highest level since June and an increase from 20 cents in October. The first supertanker of Algerian crude arrived in Venezuela on Oct. 25, according to ship tracking data.

“It’s primarily due to its sales to Venezuela” that Algeria has been able to raise premiums, Amrita Sen, chief oil market analyst at Energy Aspects in London, said by e-mail yesterday. “Otherwise, demand for light crudes has been super weak.”

The Organization of Petroleum Exporting Countries’ biggest producers, including Saudi Arabia, Iraq and Iran, cut the official selling prices of their crude exports for November amid a glut of new supply from U.S. shale reservoirs and growing competition for market share in Asia.

West Texas Intermediate crude for December delivery rose as much as 87 cents to $82.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $82.24 at 10:51 a.m. London time. Brent added 82 cents, or 1 percent, to $86.85 a barrel on the London-based ICE Futures Europe exchange.

Venezuela Blending

Venezuela is importing light oil to dilute its own heavy Orinoco crude and make it more attractive to refiners. The supertanker Carabobo loaded 2 million barrels of Saharan Blend crude in Algeria on Oct. 11 for delivery to the port of Jose in Venezuela, two people with knowledge of the matter, who asked not to be identified because they weren’t authorized to speak publicly, said on Oct. 15. The vessel arrived in Venezuela on Oct. 25, according to ship tracking data.

Petroleos de Venezuela SA booked a second tanker last week to load the same grade of Algerian crude, according to three shipping reports obtained by Bloomberg. Blending Venezuela’s heavy crude with imports of lighter oil, instead of using the refined product naphtha, delivers better returns, PDVSA, as the state-run company is known, said in a statement on Oct. 19.

PDVSA’s press office did not answer two calls from Bloomberg yesterday. Sonatrach, Algeria’s state oil and gas company, also did not respond to two calls, today and yesterday.

OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group is due to meet on Nov. 27 to assess market conditions and production levels.

 

 

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