Dated Brent assessed at four-month lows as crude paper, physical markets plunge

Platts Dated Brent was assessed at its lowest value in four months Nov. 16 as slack physical crude fundamentals and a retreat in paper markets combined to weaken the global benchmark price.

Platts, part of S&P Global Commodity Insights, assessed Dated Brent Nov. 16 at $78.145/b, its weakest value since July. 7. This marks a significant retracement from late September when expectations of a tight market in the fourth quarter underpinned by constricting OPEC+ production propelled the benchmark just short of $100/b.

European light sweet crude fundamentals have deteriorated significantly over the recent November and December trade cycles reflecting a slack market throughout the Atlantic Basin. Softening demand has sent a cocktail of different crudes from throughout the region piling into an overcrowded European market, saturating buyers and weakening differentials.

"Demand is not good, we have seen cargoes, even WTI Midland, loading in November that are still waiting for buyers," one trader said.

A second trader agreed. "Market is awful, has been awful for ages," he said.

The Dated Brent differential has tumbled since the start of the November, assessed at 40.5 cents/b on the day, down $1.06/b since Nov. 1.

North Sea Ekofisk and US WTI Midland have shown particular weakness, both defining the Dated Brent differential Nov. 16 after offers in the Platts Market on Close assessment process demonstrated value significantly weaker.

Platts assessed Ekofisk at a $2.11/b premium to Dated Brent on the day, down $1.99/b on Nov. 1 after Gunvor lifted a cargo loading Dec. 14-16 from Vitol at $2.00/b above Dated Brent in the MOC process.

Backwardation in Brent CFDs flattened significantly through the session, driven by a collapse in prompter weeks. Backwardation between the Nov. 27-Dec. 1 and Dec. 25-29 contracts stood at just 28 cents/b by the London close, according to Platts assessments. This marks the narrowest structure between the second and sixth week contracts since July.

In the flat price markets, ICE Brent futures have mirrored the steady retreat with the January and February contracts in contango by the London Close and the front month retreating $3.78/b day on day to $77.83/b. Analysts noted consistent builds in US crude stocks and growth in non-OPEC supplies offsetting the perception of a tight crude market.