In the LOOP: USGC delivered crude cargoes to UK rebound

Imported barrels of crude into the UK from the US Gulf Coast rebounded from a five-week low Friday, with shippers swapping out Suezmaxes for Aframaxes on delivered cargoes.

Delivered crude cargoes from the USGC to the UK for the week ended October 26 increased around 1 million barrels week on week, according to data from S&P Global Platts Analytics. An additional 269,000-barrel cargo was exported from the USGC to the Netherlands for that same time period, representing a week-on-week decline in USGC crude cargoes to Rotterdam of 1.35 million barrels.

Ongoing fall maintenance and soaring freight rates have contributed to lower crude demand in the region.

Cargoes delivered into the UK for the week ended October 26 included two 536,000-barrel cargoes and one 501,000-barrel cargo, all of which arrived in Liverpool. Essar Oil operates the 205,500-b/d Stanlow refinery near Liverpool.

Freight rates for Aframax vessels have been steady to higher since October 5, with the USGC-UK Continent route moving up w130 points or over 144% over those 15 consecutive trading days. On Friday, freight for the USGC-UKC route fell for the first time since October 5 to w205, down w15 points day on day.

Shipping sources have attributed the bullish movement in rates to a combination of factors, including the increase in export activity to Europe. Weather-delayed itineraries, steep bunker prices and limited tonnage availability -- dwindling on those increased US crude exports and lightering demand -- have also lent bullish support to rates.

So far in October, there have been 22 Aframaxes booked to lift cargoes to Europe from the USGC, up significantly from 15 in September and 12 in August, according to Platts fixture logs.

Despite the uptick in delivered USGC crude cargoes to the UK, overall delivered cargoes into Northwest Europe from the USGC appeared to fall 262,000 barrels week on week to 2.104 million barrels. As overall exports have declined, the assessed differentials for Permian light sweet WTI MEH crude and offshore medium sour Mars crude have weakened.

On Monday morning, WTI MEH was heard talked at WTI cash plus $6.60/b, up 30 cents from its assessed value Friday but down 20 cents week on week.

Mars was heard talked Monday morning at WTI cash plus $5/b, down 30 cents on week.

Both WTI MEH and Mars have been exported to the UK and Rotterdam in increasing quantities in recent months, according to market sources.