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Crude delivered in January nearly triples, driven by sour demand

Strong demand for sour crude grades helped boost LOOP Sour deliveries in January.

In a recent report from the Louisiana Offshore Oil Port, the company said LOOP Sour demand nearly tripled month on month, increasing by some 620,000 barrels to more than 985,000 barrels, which is about 32,000 b/d. It was the largest volume of LOOP Sour crude pulled from the Louisiana storage cavern since September.

A shortage of sour crudes along the US Gulf Coast has inverted the typical sweet-sour relationship globally. Additionally, US sanctions on Venezuela could further increase demand for sour grades.

LOOP Sour comprises US Gulf of Mexico grades Mars and Poseidon and a crude blend called Segregation 17, named after a cavern into which the Middle Eastern grades Arab Medium, Basrah Light and Kuwait Export Crude can be delivered. The grade has been most similar to Mars in terms of API gravity over the past 12 months, averaging 0.33 degree off Mars’ typical 29.44; and from a sulfur standpoint, averaging 0.02 percentage point off Arab Medium’s typical 2.53%.

LOOP Sour delivered ex-cavern in January was slightly heavier and sweeter than the month before, averaging 29.9 API and 2.23% sulfur.

Separately, the Louisiana Offshore Oil Port will auction 7,200 capacity allocation contracts in its monthly crude storage auction on Tuesday, which collectively equal 7.2 million barrels of storage for the medium crude blend LOOP Sour. The minimum bid price LOOP will accept during the auction is 5 cents/b. Monthly storage for LOOP Sour traded around 5 cents/b for all of 2018.

Auction cohost Matrix Markets said LOOP will sell up to 3,600 storage futures contracts and 3,600 physical forward agreements. The front-month contract of March will see 400 CACs put up for sale.

Last month LOOP and Matrix sold a total of 6,690 CACs of the 7,350 that were offered.
Source: Platts

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