November WTI Midland into Dated Brent Performance: 3 cargoes tracked

As trading activity in the Platts Market on Close assessment process ramped up in November, continuing the trend from October, 10 cargoes of WTI Midland traded in the assessment process, while three were delivered.

S&P Global Commodity Insights continues to closely monitor performance on all these trades as part of its ongoing commitment to upholding the highest standards of integrity and transparency. Post deal tracking has revealed full performance eventually reached on all trades tracked to date.

Pricing and liquidity

Price differentials for WTI Midland CIF Rotterdam rose to monthly highs in November trading, before plateauing through the second half of the month.

Platts, part of Commodity Insights, assessed WTI Midland CIF Rotterdam at a $2.085/b premium to Dated Brent on Nov. 25, the highest level since Oct. 16.

Light sweet delivered into the North Sea gained broadly through the month as European refinery turnaround season came to a close.

Furthermore, reports of an open arbitrage lane to East Asia exacerbated demand, with local buyers heard to be competing with Chinese and South Korean buyers for barrels.

As a result, North Sea crude oil benchmark Dated Brent firmed slightly on the month, assessed at $74.31/b on Nov. 29, up by 15.5 cents/b from Nov. 1, when the benchmark was assessed at $74.615/b.

Despite the generally strengthening market conditions, overall WTI Midland barrels landed softer with respect to local North Sea crudes, in contrast to October, when differentials remained elevated compared with North Sea loading grades.

As a result, WTI Midland defined the Dated Brent differential on an average of 38% of assessment days, up from 4% in October.

For Dated Brent, the most competitive grade on each day of the assessment period is averaged to get the Dated Brent differential on each day.

Ten cargoes of WTI Midland traded in the MOC, six more than in October.

Performance tracking

Commodity Insights monitored performance on three WTI Midland CIF Rotterdam trades published in the Platts Dated Brent MOC in October for November delivery. As part of this, Commodity Insights has reviewed various aspects of performance, including timeliness of nominations and eventual delivery, as well as published parameters of the trades, including quality and volume.

All of the trades tracked were physically delivered to buyers. Physical conditions regarding logistics which are beyond the control of the seller or buyer may result in lateness, quality issues or conditions seen as a deviation from the original wording in the reported trade, for example late delivery/loading. According to Platts methodology, if a transaction becomes difficult, the party causing the issue must seek resolution including alternative loadings, qualities, dates, or book outs.

Commodity Insights also reviewed the quality of all cargoes, and the table below shows the minimum and maximum values of some key quality metrics during this timeframe. All cargoes that were eventually delivered to buyers met the specification.