Petronas cuts Tapis oil-price factor

Petroliam Nasional Bhd, Malaysia’s state oil company, reduced a price-adjustment factor for its benchmark Tapis crude for a second month, reflecting a drop in profit for making diesel.

Petronas, as the Kuala Lumpur-based company is known, cut the factor to US$5.90 a barrel for August from US$6.50 for July, an official said today, asking not to be identified because of internal policy. The factor, set at a record for five months through January, averaged US$3.84 last year and 59 cents in 2009.

Declining gains from turning oil into diesel, or gasoil, tend to curb refiners’ demand for low-sulfur or “sweet” crude such as those produced in Malaysia. Gasoil’s premium to Asian benchmark Dubai crude fell for a fourth month in July to US$18.14 a barrel, according to data from PVM Oil Associates Ltd., a broker. This crack spread was at US$18.54 today.

Petronas includes the Tapis adjustment factor in its monthly calculations of official selling prices. The formula is tied to Brent produced in the North Sea, a sweet crude used as a benchmark in Europe, the Mediterranean and Africa. -- Bloomberg