Crude
Market Overview
Crude - USGC light sweets still looking sweet to the Far East
WTI remains as an attractive alternative to Far East buyers in the medium cracking tranche.
Even if Murban delivered price is lower than WTI, we may still see more buyers (particularly Japan and Korea) flocking to buy WTI as a point of diversification from Middle Eastern barrels.
China is immune to this trend as the 10% import tariffs on US crudes have not been lifted.
Crude - USGC light sweets lose appeal in Far East
WTI continues to remain competitive into NWE and Mediterranean markets from a marginal perspective.
However, NWE and Black Sea origin still offer stronger margins for medium complexity refiners.
Demand is to remain firm as margins stay attractive, with European refinery utilization expected to remain high through the summer.
Crude - Medium-Sours and RU Waivers
Since the end of April, US SPR sour crude stocks have declined by 16.5 mn bbls, while US sweet inventories fell by 7.3 mn bbls over the same period.
The availability of more medium-sour crude in the USGC has allowed these grades to remain globally competitive in the Far East.
Japan remains a key importer of Mars crude, as the country looks to diversify away from a heavier Middle Eastern basket, in line with the WTI import trend noted previously.
Russian crude waivers have meaningful implications for global crude demand, but most significantly impact Indian crude purchases, India having thus far shown little appetite for US-origin crude.
