By David Sheppard and Jessica Resnick-Ault
LONDON/NEW YORK (Reuters) - Saudi Arabia raised the official selling prices (OSPs) for its oil deliveries to Asia and the United States on Tuesday, in the latest signal OPEC's largest exporter is seeing signs of stronger demand.
The Kingdom raised all U.S.-bound crude prices by $1 a barrel and hiked extra-light crude oil to Asia by $1.40 a barrel, in a vote of confidence oil demand is growing in two of its biggest markets following the price crash since June.
While the increase was largely anticipated by traders amid other signs of robust demand, it bolsters the impression Saudi Arabia is comfortable with the rebound in Brent crude to around $60 a barrel after hitting a six-year low of $45 in January.
Saudi Arabia and other OPEC members sharply cut OSPs in 2014 as the group decided to fight fast-growing U.S. shale producers for market share, abandoning its policy of adjusting production to underpin prices.
Saudi Arabia's oil minister Ali al-Naimi, who led OPEC's change in direction, said last week that oil demand was growing and that markets were "calm", which some analysts said demonstrated he was happy with oil's recovery since January and that it vindicated his policy.
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To slow U.S. shale output growth OPEC needs the oil price to stay well below the $110 a barrel it averaged between 2011 and 2013, which helped trigger output growth of more than 1 million barrels per day in the United States in recent years.
But many OPEC members were hammered by the collapse in oil prices to $45 a barrel, with some facing huge budget deficits.
Traders and analysts said, however, that it is still too soon to say if the so-called 'price war' is over, with the market still dealing with a large supply surplus in the first half of this year.
"It may seem, at first, that this is the beginning of the end of the price war, but the OSP pricing was never really the transmission mechanism for Saudi output or price policy," said John Kilduff at Again Capital LLC in New York.
"The fact is that their output has held steady... The global market remains over supplied by a very large degree with no signs of easing."
A Reuters survey of OPEC production last week showed the group's output fell by 350,000 bpd in February, led by disruptions in Iraq and Libya. Saudi's output edged up to 9.70 million bpd from 9.64 million bpd in January.
Saudi also raised extra-light crude oil prices to northwest Europe and the Mediterranean by 30 cents.
UNITED STATES
APRIL MARCH CHANGE
EXTRA LIGHT +3.55 +2.55 +1.00
LIGHT +1.45 +0.45 +1.00
MEDIUM -0.15 -1.15 +1.00
HEAVY -0.95 -1.95 +1.00
Prices at Ras Tanura destined for Northwest Europe are set against Brent crude weighted average (BWAVE):
NW EUROPE
APRIL MARCH CHANGE
EXTRA LIGHT -2.15 -2.45 +0.30
LIGHT -3.75 -3.95 +0.20
MEDIUM -5.45 -5.35 -0.10
HEAVY -7.90 -7.70 -0.20
Saudi term crude supplies to Asia are priced as a differential to the Oman/Dubai average:
ASIA
APRIL MARCH CHANGE
SUPER LIGHT +1.30 +0.05 +1.25
EXTRA LIGHT +0.25 -1.15 +1.40
LIGHT -0.90 -2.30 +1.40
MEDIUM -2.20 -3.60 +1.40
HEAVY -4.35 -5.55 +1.20
Prices at Ras Tanura for Saudi oil destined for the Mediterranean are set against the BWAVE:
MEDITERRANEAN
APRIL MARCH CHANGE
EXTRA LIGHT -0.90 -1.20 +0.30
LIGHT -3.00 -2.90 -0.10
MEDIUM -4.60 -4.20 -0.40
HEAVY -6.65 -6.15 -0.50
(Additional reporting by Robert Gibbons and Catherine Ngai in New York; Editing by Christopher Johnson and Susan Thomas)