Houston — The differential for Mars crude on the US Gulf Coast reached its strongest value Monday since March 14, as lost production due to Hurricane Barry, which caused many US Gulf of Mexico producers to shut-in output, created a tight prompt market for regional grades.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Mars was assessed at a $7.50/b premium to cash WTI Monday, after it was last heard to trade at this level before the S&P Global Platts assessment deadline.
While this was a $1.10/b increase compared with Friday's assessed value, the climb in value for prompt barrels was not matched by that for forward-month barrels, boosting the first and second month spread for the grade to $3.60/b, the widest it has been since January 22, 2014, when the spread reached $4.95/b.
"LLS is keeping up with Mars as well," one market participant said Monday. "It seems to just be storm related," the source said of the continued strength of August barrels of Mars and Louisiana Light Sweet crude.
Although not nearing record highs for the year, values for LLS have also strengthened significantly following Barry passed through the region, with Monday's assessment at $7.05/b the highest since May 19. The differential for the grade has increased by almost $2.50/b since the start of July.
Supplies of medium sour crude on the Gulf Coast, already pressured by sanctions on Venezuela and Iran, and by cuts to OPEC production and dwindling Saudi exports to the US, were substantially affected by the recent storm.
In its final report on Tropical Storm Barry Saturday, the Bureau of Safety and Environmental Enforcement estimated that 3.32%, or about 62,670 b/d, of crude production in the US Gulf of Mexico was shut-in, compared with nearly 59% before the storm reached shore.
Based on data from operators, BSEE reported a total of 20 production platforms, out of 669, remain evacuated Saturday. S&P Global Platts Analytics estimates 260-350,000 b/d of US Gulf of Mexico production was lost for the month of July as a result of the storm.
--Kristian Paris Tialios, email@example.com
--Edited by Keiron Greenhalgh, firstname.lastname@example.org