• 5 minutes Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 11 minutes Saudi Fund Wants to Take Tesla Private?
  • 17 minutes Starvation, horror in Venezuela
  • 4 hours WTI @ 67.50, charts show $62.50 next
  • 3 hours Mike Shellman's musings on "Cartoon of the Week"
  • 5 mins Newspaper Editorials Across U.S. Rebuke Trump For Attacks On Press
  • 3 hours Venezuela set to raise gasoline prices to international levels.
  • 8 hours WTI @ 69.33 headed for $70s - $80s end of August
  • 10 hours Renewable Energy Could "Effectively Be Free" by 2030
  • 3 hours Batteries Could Be a Small Dotcom-Style Bubble
  • 3 hours Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
  • 9 hours Corporations Are Buying More Renewables Than Ever
  • 1 day Oil prices---Tug of War: Sanctions vs. Trade War
  • 1 day California Solar Mandate Based on False Facts
  • 14 hours Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging
  • 14 hours Again Google: Brazil May Probe Google Over Its Cell Phone System

Cheaper U.S. Crude Oil Beats West Africa Crude Shipments To Asia

Oil tanker

The huge discount of WTI Crude to Brent Crude has been supporting cheaper U.S. crude barrels bound for Asia, while West African cargoes, priced off dated Brent, have grown difficult to sell to Asian customers.

The wide WTI-Brent spread—$9 a barrel on Wednesday compared to $3-$4 a barrel just three months ago—is putting pressure on the arbitrage opportunity for West African grades, including crude varieties from OPEC members Angola and Nigeria, trading and market sources told Platts today. A recent increase in freight costs on the West Africa-Asian routes is also adding to the pressure.

Last week, Asian refiners took just a handful of Angolan crude oil cargoes in the first round of trading for the July tenders, while many Asian customers opted for large volumes of U.S. crude oil instead, market sources told Platts.

For example, Taiwan’s refiner CPC, which usually buys West African crude grades, purchased 8 million barrels of WTI Midland instead of any crude varieties from West Africa for delivery in July, according to trading sources.

“The whole West African market is changing a lot because of the growth in US oil,” a trader told Platts.

“Plus, you have Brazilian production going up, and a lot of those medium cargoes like Lula are getting shipped to China at very cheap levels, which will really curb the WAF flow to Asia,” the trader noted.

Related: OPEC Has A Global Inflation Problem

Earlier this month, Nigerian crude varieties also struggled to find buyers in Northwest Europe, which has also seen more offers of U.S. sweet grades that are directly competing with Nigerian grades.

U.S. crude oil and condensate exports to Europe have been surging lately, and traders expect the record pace to continue as U.S. oil is growing popular with European refiners, often at the expense of oil cargoes from OPEC nations and Russia. In Asia, U.S. crude oil exports have started to erode OPEC’s market share, with the United States expected to export 2.3 million bpd of crude oil in June, including 1.3 million bpd bound for Asia.

By Tsvetana Paraskova For Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News