LONDON: Russian medium sour Urals prices sank to a 14-month low on Wednesday in a move that surprised many traders, given a shorter June Urals programme.
Plentiful alternatives, relatively poor margins and a slow clearing of May loading sour grades has weighed on the market.
In the Platts window, Glencore sold a 100,000 tonne Urals cargo to Statoil at dated Brent minus $2.35 cif Rotterdam, loading June 9-13 from Baltic ports, the lowest since early March last year.
"The Urals programme was expected to be shorter, and it is, but margins are not so good and there is a lot of volume still on offer in the market," one trader said.
Another added that there was an overhang of May loading Iraqi Basra Light cargoes, a medium sour alternative. Oil exports from Iraq's southern terminals are on track for a record high in May.
Exports of Basra Light have averaged 2.60 million barrels per day (bpd) in the first 27 days of May, according to shipping data tracked by Reuters.
If sustained, it would mean the highest since 2003. Arbitrage of cargoes from outside the region was also open, adding to the glut of sour crude.
"Mexican Olmeca, UAE Murban, Vasconia as well and West Canada Select via the United States are coming to Europe. I think it has caught everyone out," a third trader said, pointing out the market's tendency to focus on local programmes.
In the south, PetroIneos offered an 85,000 tonne cargo of Kazakh CPC Blend down to dated Brent minus 45 cents cif Augusta, loading June 14-18 but no buyers surfaced.
This is a steep fall from earlier estimates of dated Brent plus 10 cents, and despite a small June programme at 2.827 million tonnes.
The fall in the light grade coincides with an escalation of violence in Libya, which exports predominantly light sweet crude.
Libyan warplanes bombed militia bases in Benghazi on Wednesday as part of a renegade former general's campaign to purge the chaotic North African state of Islamist militants, witnesses and officials said.
The attacks are part of a campaign by irregular forces loyal to former Libyan army general Khalifa Haftar who earlier this month launched operations against Islamist militants he says the weak central government has failed to control.
Comments
Comments are closed.