SAUDI OSP PREVIEW: Saudi Arabia is expected to cut prices for all grades of crude it sells to Asia in January amid a weaker Middle East benchmark Dubai and low margins for light products, industry sources said.

The official selling price (OSP) for Arab Light may fall between 50 cents and $1.20 a barrel to the lowest in at least three months, a Reuters survey of six refiners showed.

"The OSP should be lowered to compensate for a weaker intermonth structure, but since the flat price has fallen below $60 I wonder if Aramco will cut prices less," said a second respondent, expecting a 50 cent cut in Arab Light's January OSP.

Still, fuel oil margins have hit all-time highs, supporting prices for all Middle East grades which yield a large portion of the residue. Hence, Arab Medium and Arab Heavy OSPs will see smaller price cuts, the respondents said, with one forecasting that Arab Heavy will remain unchanged in January.

"The fuel oil crack is quite strong while naphtha and gasoline cracks are really weak so we expect a heavy discount on Arab Extra Light. There might even be a price hike for Arab Medium and Arab Heavy," said a third respondent.