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Crude Oil Price Movements

6

OPEC Monthly Oil Market Report – August 2017

The light sweet/medium sour crude spread

Sweet/sour differentials

were mixed in July, widening significantly in Asia, while narrowing in Europe on

tighter sour supplies.

In

Asia

, the Tapis premium over Dubai increased for the second month in a row, despite a tighter sour

market. A near $1/b widening in the Brent/Dubai spread slowed the west-east arbitrage movement for

Atlantic Basin crudes. Lower supplies of Vietnamese sweet crudes also supported the Asia Pacific light

sweet oil market. Moreover, continuing healthy demand for Asia Pacific light sweet crudes amid firm refining

margins in Asia and returning regional demand from Chinese independent refiners, supported the trend.

The Tapis/Dubai spread widened by 91¢ to $2.92/b in July. The Dated Brent/Dubai spread widened,

improving by 88¢ to the advantage of Brent, a 92¢ premium compared with the previous month’s 4¢

premium.

In

Europe

, the light sweet North Sea Brent premium to Urals medium sour crude decreased again by 21¢ to

69¢, a fresh two-year high on firm demand for sour crudes. Urals price differentials to Dated Brent

strengthened in the Mediterranean amid limited exports of Urals and higher demand for medium sour crude

oil. A steady flow of Urals to buyers in India boosted interest in the grade’s tight second-half July supplies.

Meanwhile, strong fuel oil margins and tighter supplies of medium and heavy sour crude due to OPEC and

non-OPEC production adjustments supported the market for medium and heavy Atlantic Basin crudes such

as Urals.

Graph 1 - 5: Brent Dated vs. Sour grades (Urals and Dubai) spread

On the

US Gulf Coast (USGC)

, the Light Louisiana Sweet (LLS) premium over medium sour Mars narrowed

to $3.17/b on increased demand from refiners for sour alternatives to OPEC supplies. Mars also found

support from the shutdown of the 220 tb/d Cano Limo-Covenas pipeline, as well as higher prices for

competing Colombian and Western Canadian Select (WCS) prices.

-2

0

2

4

6

-2

0

2

4

6

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

US$/b

US$/b

Dubai

Urals

Sources: Argus Media, OPEC Secretariat and Platts.