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UPDATE 1-UAE's ADNOC cuts Murban crude premiums for Q1 2017
November 7, 2016 / 8:32 AM / a year ago

UPDATE 1-UAE's ADNOC cuts Murban crude premiums for Q1 2017

* Murban Q1 2017 premiums at 17-19 cts/bbl vs 20 cts in H2 2016

* Cuts term duration by 3 months amid oilfield concession talks

* Talks for Upper Zakum Q1 2017 supplies ongoing (Adds quotes, background on oilfield concessions)

By Florence Tan

SINGAPORE, Nov 7 (Reuters) - Abu Dhabi National Oil Company (ADNOC) has finalised the sale of some Murban crude supplies for the first three months next year at lower premiums than the second half of 2016, four sources familiar with the matter said on Monday.

The price cuts came after the producer shortened the duration of its sales period to accommodate ongoing oilfield concession talks and as traders suffered losses for most of 2016 when they re-sold the cargoes.

”The market situation is very bad. It’s oversupplied and there’s high stocks, one of the sources said.

ADNOC has reached an agreement with some buyers to sell Murban crude in the first quarter at 17-19 cents a barrel above the grade’s official selling price (OSP), the sources said.

The premiums for the cargoes, which do not have a fixed destination, are down from the 20-cent premium for second-half 2016 supplies, they said, without indicating the volumes being sold under that pricing.

“Everyone is complaining that OSPs are too high. Based on OSPs, traders are not making money,” another source said.

ADNOC could not be reached for comment.

The producer has been selling a portion of its Murban output via six-month agreements after concessions at the field operator Abu Dhabi Company for Onshore Petroleum Operations (ADCO) expired in January 2014.

To accommodate the ongoing talks, ADNOC shortened the duration of its Murban sales by three months, the sources said.

Separately, ADNOC is in talks to sell first-quarter Upper Zakum crude supplies.

It last offered Upper Zakum at 20 cents a barrel above the grade’s OSP, but some traders said it would be tough to make a profit over the short period. (Reporting by Florence Tan; Editing by Himani Sarkar and Muralikumar Anantharaman)

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