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Colombian Castilla, Vasconia crude prices hit highest since Sep 2017

  • Author
  • Maria Eugenia Garcia
  • Editor
  • Wendy Wells
  • Commodity
  • Oil

Houston — Colombian heavy-sour Castilla Blend and medium-sour Vasconia crudes were assessed Tuesday at the highest prices since September 2017 as a result of strong buying interest due to expectations of limited supply.

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The differential for Castilla Blend was assessed up $1.60/b from Monday at minus $5.50/b to Platts Latin Brent Strip, the highest assessment since September 6, 2017, when it was $5.40/b, S&P Global Platts data showed.

The average differential for the Colombian crude was minus $9.00/b in 2018, according to the data.

Tuesday's assessment was also the highest day-on-day increase in price since January 2013, when Platts launched the assessment of Latin American crudes to the Platts Latin Brent Strip.

"Castilla Blend has been one of the first Latin American crudes to react with a considerable price hike to news of US sanctions on Venezuelan crude imports," one trader said.

The Colombian grade competes for business in the US with heavy-sour crudes from Venezuela, Saudi Arabia, Iraq, Mexico, Ecuador and Canada that are used in the production of asphalts.

However, recent OPEC production cuts and the announcement of US sanctions on Venezuelan crude imports are expected to put pressure on heavy-sour grade prices around the world, according to market sources.

In 2018, US refiners imported 56 million barrels of Castilla Blend, while imports from Venezuelan amounted to 190 million in the year, according to US Customs Bureau data.

Colombia's state-run oil refiner Ecopetrol is the sole producer of Castilla Blend, which typically has 18.8 API gravity and 1.97% sulfur content.

An average of 13-14 cargoes of the heavy-sour grade are scheduled for loading on a monthly basis out of the port of Covenas in Colombia for export to the US, Europe and Asia.

According to market sources, Ecopetrol last week sold via tender a March cargo of Castilla at minus $4.50/b to ICE Brent, but details of the buyer and laycan could not be confirmed.

Strong appetite for Colombian medium-sour Vasconia catapulted its differential for March loadings in two separate tenders this week.

Canada-based oil producers Parex Resources and Frontera Energy sold 500,000 barrels and 2.5 million barrels of Vasconia, respectively, at around $2/b discounts to ICE Brent, according to market sources.

The cargoes were bought by US refiners who posted aggressive bids, one market source said.

"Colombian crudes have momentum as the market is expecting fewer barrels in the near future," another crude trader said.

Vasconia, with 24.3 API gravity and 0.83-1% sulfur content, was seen traded in multiple tenders at an average of minus $5.50-5.00/b to ICE Brent in 2018. Platts on Tuesday assessed Vasconia at minus $2.50/b to Platts Latin Brent Strip, the highest since September 25, 2017, when it was $2.75/b.

--Maria Eugenia Garcia, maria.eugenia.garcia@spglobal.com

--Edited by Wendy Wells, wendy.wells@spglobal.com