03-03-2017

Russia’s ESPO crude oil premiums hit multi-month lows as April exports set higher

Crude

Price differentials for ESPO Blend crude extended losses to multi-month lows, as bigger exports volume set for April added further downside pressure to the Far East Russian grade that was already strained by rival Abu Dhabi supplies offered from a nearby region.

S&P Global Platts assessed the second-month ESPO Blend crude at a premium of $2.50/b to the Platts front-month Dubai crude assessments Wednesday, the lowest cash differential since September 27, 2016 when it stood at a $2.35/b premium.

Among some of the latest spot deals that took place in Far East Russia, Surgutneftegaz was said to have sold four cargoes of ESPO curde for loading over April 14-18, April 19-23, April 22-26 and April 26-30 to an oil major, a Chinese company, an unidentified trading house and a North Asian refiner, respectively, at premiums of $2.60-$2.90/b to Platts front-month Dubai crude assessments on a FOB basis.

Furthermore, trade sources said Swiss trading house Tenergy could have sold a cargo of the medium sweet Russian grade for loading in late April at a premium of around $2.52/b, while Trafigura was said to have sold late last week a cargo, for loading in the first half of April, at a premium below $2.50/b to Platts Dubai.

In comparison, most March-loading ESPO cargoes received premiums of around $3.30-$3.60/b in the previous trading cycle.

“[ESPO sellers] were already struggling to cope with [rival] Murban [crude barrels offered from South Korean storage units] … the bigger [April export] program is just a nail in the coffin,” said a Singapore-based crude trader.

Platts reported last week that Abu Dhabi National Oil Co. was offering via private tenders at least 2 million-4 million barrels of light sour Murban crude for April loading from Yeosu, South Korea.

Regional traders said Murban crude offered from South Korea may have lured some Asian customers away from the Far East Russian market in the past few weeks.

Trade sources said several Japanese end-users, who were initially planning to pick up some April ESPO cargoes, were expressing their interest in the Yeosu-loading Murban barrels.

Furthermore, market talk indicated that an unidentified Thailand-based buyer could have bought some of the light sour crude offered from South Korea, but full details couldn’t immediately be verified.

APRIL ESPO CRUDE OIL EXPORTS SET TO INCREASE

A total of 2.706 million mt of Russian ESPO Blend crude is scheduled for export in April, up 7.2% from March, according to the latest monthly loading program seen by Platts.

The April loading program, which runs from March 31 to April 30, will comprise a total of 27 cargoes, 26 of which are 100,000 mt each and a single cargo of 106,000 mt.

In comparison, Russia is set to export 2.525 million mt of ESPO crude in March, comprising 20 stems of 100,000 mt each and five of 105,000 mt each.

The April loading rate will average at around 639,838 b/d, up from 544,360 b/d scheduled for March. The March loading program runs from February 27 to April 1.

The April program showed state-owned Rosneft holding nine cargoes, Russia’s Surgutneftegaz with eight, and six cargoes for Swiss-based Tenergy. As for the rest of the equity holders, Gazpromneft has two cargoes and Lukoil holds one cargo for April.

Source: Platts 

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