Crude
Market Overview
Prompt barrels out of the SoH are depressing crude premiums, e.g. Murban premiums tumbled more than $7/bbl vs Dubai in June.
Saudi August OSP cut by $11/bbl into Asia for August loaders confirms the narrative.
WAF crude premiums were at a race to the bottom, with China shunning the oil in May/June trading. Djeno assessed at all-time low of Dated -$14/bbl.
Dated Brent basket faring poorly as well, with Forties at Dated -$1/bbl.
US medium grades are not spared, with Mars and Thunderhorse premiums falling.
The fifth ADNOC tender since June for July and August loaders saw at least 16 mb sold, with the majority Upper Zakum awarded to Japanese, Korean, Chinese SOE and independent refineries.
Chinese teapots are now out buying, indicating that the current discounts are now at a level that competes with Iranian and Russian alternatives.
The current 'mini-glut' is a reflection on the mismatch of prompt availability of oil vs the natural trading window two months ahead for which AG barrels should now be trading September loaders instead.
These extra barrels will first fill up onshore commercial storage as Dubai is in contango and then relieve the pressure by arbing West. Floating storage is not likely to be economic.
WTI vs Murban arbs are shut into Far East since May trading for July loaders, CPC also not workable into Far East.
Brent-Dubai EFS does not necessarily need to widen that much more because diving crude premiums are doing most of the heavy lifting to keep the arbs open into NWE and even into USWC.
AG crude will likely see more arbs open structurally into the West than pre-war given a marginal shift out of AG diet in Eastern refiners.
