- US weekly crude exports last week average 3.651 mil b/d: EIA
- Weaker differentials favorable for US crude arbitrage economics
Platts American GulfCoast Select was assessed at $73.75/b on June 23, as the assessed differential for the grade against both the 15 to 45 days forward NYMEX WTI strip and forward Dated Brent strip strengthened on the day, while a fresh report from the US Energy Information Administration showed a slight downtick in crude exports last week.
As a differential to the 15 to 45 days forward NYMEX WTI strip, was assessed 14 cents/b stronger on the day at a $1.11/b premium. Against the forward Dated Brent strip, Platts AGS was assessed 4 cents/b stronger at a 75 cents/b discount.
US crude exports over the week ended June 18 averaged 3.651 million b/d, down 233,000 b/d from the week prior, according to data from the US Energy Information Administration, as recent tightness in arbitrage economics could find relief in falling US Gulf Coast differentials.
While the weekly average was down on the week, the four-week moving-average for the period ended on June 18 was reported 55,000 b/d higher from the prior four-week period at 3.253 million b/d – the highest four-week moving-average since the period ended on Feb. 12.
These high export levels could come under pressure as recent changes in arbitrage economics have hurt the competitiveness of US crude abroad.
The Brent/WTI swaps spread, one indicator of the competitiveness of US crude on the international market, has seen a sharp narrowing in recent days, even touching multi-year lows. Since June 10, the Brent/WTI swaps spread has averaged $1.76/b, while through the first five months of 2021, the spread averaged $2.97/b. As the spread narrowed, WTI-based crudes are generally seen as less competitive versus those based on Brent.
Even with USGC crude differentials falling to more than one-year-lows in recent days, export economics remain difficult for US crudes. While this weakening on USGC crude differentials has helped-out arbitrage economics, there remains more competitive options amongst other Atlantic basin crudes, particularly amongst sweet grades.
The arbitrage incentive for WTI MEH crude into Rotterdam against local Forties was reported at 27 cents/b on June 22, according to the Platts Crude Arbflow calculator, well above the month-to-date average of minus 54 cents/b as recent weakening on the grade improved economics. By comparison, the arbitrage incentive for Nigeria’s Bonny Light grade into Rotterdam against Forties was reported at $1.58/b on June 22, while the month-to-date average was $1.08/b.