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Crude Oil Price Movements

6

OPEC Monthly Oil Market Report – September 2017

The light sweet/medium sour crude spread

Global sweet/sour differentials were mixed in August when they widened further in Asia, while in Europe they

narrowed again on tighter sour supplies. In the USGC, the spread remained unchanged.

In

Asia

, Tapis premium over Dubai increased for the third month in a row, despite ongoing lower sour crude

supplies. The spread grew as the Brent/Dubai spread widened further to around $1.35/b, which further

slowed west-east arbitrage movement for Atlantic Basin crudes. Lower supplies of Vietnamese sweet crudes

amid the start-up of a new refinery there 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 new

requirements for refined products for export to the US in the aftermath of Harvey, supported the trend. The

Tapis/Dubai spread widened by 45¢ to $3.37/b in August. The Dated Brent/Dubai spread widened, improving

by 42¢ to the advantage of Brent, a $1.34/b premium compared with the previous month’s 92¢/b premium.

In

Europe

, light sweet North Sea Brent premium to Urals medium sour crude decreased again by 36¢ to

33¢, a fresh two-year high on firm demand for sour crudes. Urals price differentials to Dated Brent

strengthened in the Mediterranean amid strong margins, limited supply and a steady flow of Baltic barrels to

Asia, which offset an outage at Shell's Pernis refinery. Meanwhile, late in the month Urals crude differentials

to Dated Brent in Northwest Europe weakened for an eighth consecutive session. The grade has been under

pressure after a loading plan for Baltic ports and Novorossiysk showed ample supplies amid a heavy

domestic refinery maintenance season, limited buying interest and weaker refinery margins.

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

In the

USGC

, the Light Louisiana Sweet (LLS) premium over medium sour Mars remained at $3.17/b. The

USGC grades rallied to their strongest levels in nearly two years after Brent's premium over US crude

widened, helping to increase the amount of crude exports overseas to Asia. Meanwhile, differentials on the

USGC were mixed in volatile trade with low liquidity, as tropical depression Harvey caused destruction

throughout the USGC energy industry. Trading was fairly thin, with many Houston traders out of their offices

because of flooding. About 4.4 mb of US refining capacity has been shut down by the height of the storm,

representing nearly a quarter of US refining production.

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Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

US$/b

US$/b

Dubai

Urals

Sources: Argus Media, OPEC Secretariat and Platts.