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| Sweet crude differentials to Brent tumble in Med despite Libya outage |
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| News Source：http://www.jinchemical.com/
; SendDate：2014-12-25 16:41:46 |
Mediterranean sweet crude differentials to Dated Brent have pulled back this week, despite the near-total suspension of crude exports from Libya, as the ample supply of crude at the prompt continues to add weight to the market.
On Tuesday, CPC Blend Aframax cargoes, basis CIF Augusta, were assessed at a $0.65/barrel discount to the Mediterranean Dated Strip, with some market sources indicating that Suezmax cargoes have traded as low as Dated Brent minus $0.90/b in January.
Traders said that differentials for CPC Blend, which saw a brief upswing in the immediate aftermath of the force majeure declaration on Libya's Es Sider exports, have once again been pushing lower as demand for prompt cargoes has failed to keep pace with the longer loading program in January.
"There are plenty of CPC Blend cargoes in January, and the market has come off," a trading source said. "There are a lot of Afras and Suezes still around...from January 10th onwards. People aren't in too much of a rush to buy it."
Market sources said that weak naphtha cracks -- CPC Blend is particularly naphtha-rich -- have led to struggling demand in the face of wide availability of more distillate-rich crudes like Azerbaijan's Azeri Light or incoming flows from Nigeria.
"The West African hangover is not helping," a crude trader said, adding that much of the January loading program out of Nigeria is expected to ship into the European market because "it has to find a home somewhere."
Libya's state-owned NOC announced earlier this week that escalating fighting across the country has led to crude production dropping below domestic consumption. NOC declared a force majeure on loadings out of its largest terminal -- the 340,000 b/d Es Sider along the Gulf of Sidra in the east -- last week, but announced Monday that fighting has now affected production at the Mellitah Oil and Gas Complex in the west.
Traders said that while differentials for Mediterranean sweets have, in the past, seen heavy upswings in demand as stability in Libya deteriorated, ample supply of other sweet crudes in the region has significantly limited any bullish impact this time.
Of the major sweet crudes in the Mediterranean, traders said that only distillate-rich Azeri Light has seen any sustained bullish upswing in differentials.
"The trouble in Libya [this month] has really kept Azeri from collapsing," the first source said. "It was going at [Dated Brent plus] $1.30/b when the newest disruptions in Libya started, and now we have it around [Dated Brent plus] $1.90/b."
On Tuesday, Aframax cargoes of Azeri, basis CIF Augusta, were assessed at a $1.85/b premium to the BTC Dated Strip.
"Refiners do see value [at these levels]," a crude trader said.
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