With refinery margins at their worst in the current long downward price cycle and West African crude deliveries building up for October and early November, light Middle East grades were expected to see diminishing premiums this week.

In addition, a good supply of Asian crude was keeping benchmark regional prices under pressure.

Light Australian grades were falling to steep discounts and the heavier benchmark Minas grade was seen swinging into discount.

Minas was under pressure owing to some late August sales and September's market also looks weak after Indonesia raised the export allocations.

Traders said they expected Minas to move to a discount soon, with some expecting the market to move as deep as 10 to 20 cents below the official selling price, or Indonesian Crude Price (ICP).

Light Middle East grades, particularly ADNOC crudes, were expected to face the main price pressure off the back of the West African imports and weak margins this week.

In early trading on Monday, with October Murban on offer but bidders standing back.

Asian diesel is at a 10-year low, despite a modest pick up in Brent and Nymex crude prices, which is pinching refinery margins.

Singapore benchmark traded diesel hit a 10-year low last week of $13.60 per barrel, which compared with Murban at $12.56 and Tapis crude at $13.00 on Monday.

But apart from refinery margins, West African deliveries lined up for October and November are building up owing to a narrow Brent/Dubai spread, which has opened the arbitrage window.

The October Brent/Dubai was just 10/20 cents apart early on Monday and November was at 45/55 cents, both levels that traders would consider offer ample opportunity to import West African grades.

However, traders said that Qatar Marine was achieving steady to firm premiums, which they attributed to support from refineries covering the loss of Saudi term barrels.

Saudi Aramco has told customers to expect an 18-percent cut in September allocations, so buyers have scrambled to cover the lost volume by seeking October Qatar Marine. There is also worry that Saudi Arabia might extend the 18-percent cut into October, traders said.

Qatar Marine has traded several times at a premium of 19 cents over the official selling price.

Oman is holding steady premiums for now and could find some support from Qatar Marine because of some similar properties.

"People seem to want Qatar Marine type crude, which might offer some support for Oman," one trader said.

But traders said Oman buyers were relaxed and any bids that did show were taken out quickly by sellers.

In addition, West African imports could impact demand for Oman because many West African crudes have similar sulphur content and are often sought as a direct replacement for Oman.

"My feeling is that Oman is taking a lot of the heat from the narrow Brent/Dubai," one trader said.

"I don't think the price will rise," he said.