By Christian Schmollinger
(Bloomberg) -- Abu Dhabi National Oil Co., the state-owned producer, cut May crude prices from the highest in more than a year as refiners reduced purchases from the country because of competition from alternatives.
The company reduced the price of Murban crude, its largest export grade, by 8.2 percent to $77.85 a barrel, it said in an e-mailed statement today. Lower Zakum dropped by the same percentage to $77.65 a barrel.
Abu Dhabi, the United Arab Emirates’ capital and holder of most of its oil resources, cut Upper Zakum by $6.90 a barrel, or 8.4 percent, to $75.75 a barrel. Umm Shaif crude fell to $77.30 a barrel, Adnoc, as the company is known, said in the statement.
Falling demand for Murban, which yields a large amount of gasoil after processing, caused the grade’s premium to its benchmark to shrink last month as Asian refiners chose cheaper alternatives. The crude slipped to a discount of 13 cents a barrel on May 26, its lowest level since Jan. 5.
The U.A.E., holder of almost 8 percent of the world’s oil reserves, is the fifth-largest producer in the Organization of Petroleum Exporting Countries, pumping 2.32 million barrels of crude a day in May, according to a Bloomberg survey.
Some producers including Saudi Arabia and Iraq announce price formulas as a premium or discount applied to a benchmark to determine the cost of oil sold in coming months. Abu Dhabi announces prices for crude lifted the previous month based on market conditions, demand, and producer and exchange prices.
--With assistance from Yee Kai Pin in Singapore. Editors: Jane Lee, Alex Devine.
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