Crude
Market Overview
Crude: US-Asia arbs open
WTI continues to land cheaper in December windows than Murban into the Far East as Murban FOB and TD34 freight soared.
This is despite gains in TD25 freight rates which has increased by over 210 WS points since the beginning of September.
CPC blend on a Suezmax via Red Sea and Cape Rerouting both appear to remain viable for Asian outlets. Though, this presents a key risk given the potential for spill over from the Russian-Ukrainian War, should the brokered deal between the two states fails.
Crude: European physical window strengthens
Crude supplies bound for Europe from Saudi Arabia via the SUMED pipeline system have been cancelled following strikes on the E/W pipeline.
This led to extreme strength in the North Sea window. Johan Sverdrup was bid at a record high of $24/bbl over Dated Brent.
The DFL has gained to a high of +$18.95/bbl in the September tenor.
This has opened WTI arbitrage opportunities for late-October delivery windows into NWE to backfill lost supply.
Crude: Mars appears firmly bullish
Global supply remains constrained, with the E/W pipeline rumoured to be bypassed in late September.
The risk remains a lack of medium-sour grades as US SPR releases end.
Diesel cracks stay well supported by lost refining capacity and the failing US-brokered Russia-Ukraine ceasefire.
Losing AG medium grades, the final steady-state refining barrel increasingly looks like Mars.
As global medium grades tighten, Mars upside remains likely as Q1 2027 swaps gain liquidity.
