Alaska North Slope crude hits new lows, trades at $10.25/b discount to ICE Brent

Houston — Alaska North Slope crude values dropped sharply, reaching fresh lows this week as trading for June cargoes started.

Alaskan North Slope crude for June delivery to the US West Coast traded late Wednesday at a $10.25/b discount to the June ICE Brent calendar month average.

That followed a trade reported Tuesday at ICE Brent CMA minus $10.15/b. It is the steepest recorded discount to ICE Brent since ANS began regularly trading versus the Brent benchmark in 2018.

The last steepest recorded discount to ICE Brent CMA was on December 1, 2016, at minus $4/b. Since 2018, the steepest discount seen has been ICE Brent CMA minus $2.95/b on March 13, 2020. In March, six ANS trades were reported to S&P Global Platts, averaging a $1.22/b discount to the ICE Brent CMA.

Considering the June ICE Brent CMA on Wednesday, that put outright values for ANS at around $26/b.

Platts has not yet started assessing June ANS, and will roll to the new month on April 13. Platts last assessed May ANS at WTI CMA minus $2.28/b on Wednesday, which put the outright value at $28.85/b. Platts assessed the ANS outright on April 1 at $23.22/b -- its lowest value since April 29, 2003 when it reached $22.92/b.

North Slope producers typically require outright prices above $20/b to generate operating cash flow, according to S&P Global Platts Analytics.

ANS crude values have dropped, in line with falling West Texas Intermediate and Brent benchmark pricing since early March.

Weakened demand due to the coronavirus epidemic and oversupply in the crude market is depressing crude differentials for almost all crudes around the world. ANS crude, which has a typical API gravity of 32 degrees and sulfur content of 1.5%, is mainly purchased by US West Coast refineries and moved via Aframax from Valdez, Alaska, to facilities in Washington and California.

US West Coast refinery crude inputs fell for the third consecutive week for the week ending April 3, declining 220,000 b/d, just over 10% to 1.87 million b/d, according to weekly data released Wednesday from the Energy Information Administration.

The dip in USWC refinery runs coincided with a 996,000-barrel build in stocks along the West Coast to a total of nearly 55 million barrels, last reported higher in mid-June.