Factbox: Key Brent crude benchmark hovers near 21-year low

Physical Brent crude, or Dated Brent, remained close to a 21-year-low Wednesday in the wake of the worsening coronavirus pandemic as demand plummets and storage capacity is overwhelmed.

The North Sea benchmark has become the latest major global measure in focus after the expiring contract for WTI in the US briefly dipped into negative territory. Used to price more than half of the world's crude, Brent is closely watched as a barometer for the health of the wider oil market.

"There is extreme disconnect between physical Brent (Dated) and financial (ICE Brent)," S&P Global Platts Analytics said in a recent research note. "We see Dated Brent at $10-20/bbl in the second quarter as stocks soar to containment levels, with improvement largely delayed to 2021."

PRICES

Spreads between Brent futures prices and those of US benchmark WTI and Middle East marker Dubai often determine trade flows of crude, as buyers and sellers try to take advantage of arbitrage and regional economics.

**The front-month ICE Brent crude futures contract stood around $20.50/b at 1840 GMT after briefly dropping to $16/b, the lowest since Apr 28, 1999.

**Dated Brent was assessed at $13.24/b on April 21; the lowest since March 18, 1999 and 44% down since OPEC+ met to discuss its latest output cuts on April 9.

**S&P Global Platts started assessing the benchmark in 1987 and the lowest it has ever been assessed was $9.03/b on Dec 10, 1998.

**The spread between ICE Brent futures and physical Dated Brent stood at $6.09/b market close Tuesday after hitting a record high of $10/b in recent weeks.

INFRASTRUCTURE

Storage is under pressure as supply continues to outstrip demand, which is expected to fall by almost 20 million b/d in May, according to S&P Global Analytics. The squeeze on storage is now starting to pressure more global crude benchmarks.

**The loading terminals for the Brent crude grades have storage capacity totaling around 33 million barrels, which can help iron out disruptions, with additional storage available elsewhere around the North Sea.

**Sullom Voe in the Shetland Islands, the loading point for crude from the Brent cluster of oil fields, and a heavier grade known as Clair, has particularly ample storage, at about 8 million barrels.

**Global commercial crude stocks have risen 270 million barrels year-to-date to almost 3 billion barrels to their highest since October 2017.

**As of April 16, global crude stocks were 2.78 billion barrels, or 89 million barrels away from hitting the record high of 2.87 billion barrels in June 2017, according to S&P Global Platts data.

**In the week to April 10, the US reported the largest-ever build in US commercial crude stockpiles - 19.3 million barrels.

TRADE FLOWS

North Sea crude, which underpin the Dated Brent benchmark mostly head into the European market where refineries are coping with severe economic lockdowns that have crushed demand for transport fuels in the region. The UK exports around 80% of its North Sea crude production, with the Netherlands the largest destination country.

**The Dated Brent physical crude benchmark is based on five main crude oil grades - Brent, Forties, Oseberg, Ekofisk and Troll - loaded at terminals around the North Sea.

**Together these amount to around 1 million b/d of production, or a third of western Europe's oil output, and 1-2% of global supply. The largest supply source is the UK's Forties blend, with loadings of 350,000-400,000 b/d, shipped from Hound Point in eastern Scotland.

**In addition to key North Sea grades, the world's biggest crude streams priced from Dated Brent are in the Middle East and Russia. Some 3.2 million b/d of Russia's medium sour Urals crude is priced to Dated Brent as is 3 million b/d of Iraq's Basrah Light.

**Saudi Arabia's medium sour Arab Light crude exports to the West is the biggest in terms of volumes while most West African crudes are also sold as a differential to Brent.