- Platts AGS assessed at $66.03/b, weaker against forward Dated Brent strip
- Fewer arbitrage opportunities to Asia contributing to export weakness
Platts American GulfCoast Select was assessed at $66.03/b on May 14, with the differential for the grade moving lower against both the 15 to 45 days forward NYMEX WTI strip and forward Dated Brent strips.
Sources have noted weakness in demand for exports as well as length in the Atlantic basin crude market.
“What I’ve been hearing is that [the] international market is much weaker than the domestic one,” one trader said, noting a disparity between the bids seen on FOB cargoes compared with the levels the barrels are being placed at within the domestic market.
Sources have also noted to Platts that length in the European sweet market, particularly with ample supplies of US grades, has led to a divergence in values for WTI crude in Europe versus regional North Sea grades, with US grades coming under pressure. Also, fewer arbitrage opportunities for US crude into Asia has increased availability of US crude and added to the weakness, a source told Platts.
Through the start of May, the arbitrage incentive for WTI MEH crude into Japan against local ESPO crude has averaged minus $1/b, while in April and March the arbitrage incentive averaged minus $1.11/b and minus $1.12/b, respectively, according to the Platts Crude Arbflow Calculator.
Also, slower demand from India as the country battles a sharp increase in coronavirus infections and as some refiners begin to cut runs have left more West African barrels, particularly Nigerian cargoes, in the market as India was a major purchaser of crude from the West African country.
“Many May Nigerian cargoes still there being shown pretty discounted,” a trader noted.
US crude exports to Europe were strong in recent weeks, with the four-week moving average of US crude exports to Europe over the period ended May 14 at 1.22 million b/d, according to data from data intelligence company Kpler, but a trader did not see exports working to the region “for the marginal player.”
In terms of Platts AGS’ assessed differentials May 14 against the forward NYMEX WTI strip, Platts AGS was assessed a penny weaker on the day at a 71 cents/b premium, while against the forward Dated Brent strip, the grade was assessed 25 cents/b weaker on the day at a $2.27/b discount.
The most recent offer level heard for June loading WTI cargoes out of the USGC May 14 was at a $2.20/b discount to August ICE Brent futures.