Table of Contents Table of Contents
Previous Page  14 / 103 Next Page
Information
Show Menu
Previous Page 14 / 103 Next Page
Page Background

Crude Oil Price Movements

6

OPEC Monthly Oil Market Report – November 2017

Asia is set to ramp up crude oil imports from the US in late 2017 and early next year. As many as 11 tankers,

partly or fully laden with US crude, are due to arrive in Asia in November, with another 12 to load oil in the

US later in October and November before sailing for Asia. Between November and January, very large

volumes of US crude are reported to be heading to Asia. This increasing arrival of arbitrage crude is putting

significant pressure on West African and other Brent-related sweet grades.

The first-month ICE Brent/NYMEX WTI spread widened to $6.05/b, a 42¢, or 7.4%, expansion.

Table 1 - 3: NYMEX WTI and ICE Brent forward curves, US$/b

The light sweet/medium sour crude spread

The sweet/sour differentials in Europe and Asia narrowed on all fronts, amid tighter supplies and healthy

demand for sour grades, while lighter grades came under pressure from arbitrage flows from the US. In the

USGC, the spread widened, despite lower sour crude imports from OPEC countries.

In

Europe

, the light sweet North Sea Brent

premium to Urals medium sour crude decreased

sharply by 71¢ to 47¢/b, bouncing back to a two-

year low premium. Urals differentials to Dated Brent

were higher on limited supply of the grade ex-

Novorossiysk in November and lower shipments of

crude from the Kurdistan region to the port of

Ceyhan. Urals differentials continued to improve

against Dated Brent due to a sharp fall in

November loadings from Russia's Baltic ports and

healthy demand from European refiners.

In

Asia

, the Tapis premium over Dubai decreased

for the first time in four months amid ongoing lower

sour crudes supplies. The Brent/Dubai spread also

narrowed, theoretically encouraging the flow of

west-east arbitrage for Atlantic-Basin crudes.

Graph 1 - 6: Brent Dated vs. sour grades

(Urals and Dubai) spread

Spot trading of December-loading cargoes started off on a strong note in the Middle East crude market with

several grades sold at premiums against their OSPs. The Dubai Market was supported by the Saudi supply

adjustment to some buyers in Japan and China in December. Peak seasonal winter demand in the Northern

Hemisphere will lift demand for distillate-rich grades out of the Middle East.

On the other hand, light sweet Tapis was under pressure from increasing US exports to Asia. Demand from

the key buyer China for spot crudes in Asia Pacific slowed, as independent refiners in China have used up

2017 crude import quotas and are waiting for Beijing to issue next year's quotas.

The Tapis/Dubai spread narrowed by 59¢ to $4.17/b. The Dated Brent/Dubai spread narrowed by 91¢ to

$1.65/b from $2.56/b in the previous month.

1FM

2FM

3FM

6FM 12FM 12FM-1FM

NYMEX WTI

25 Sep 17

52.22

52.52

52.74

52.86

52.28

0.06

25 Oct 17

52.18

52.43

52.59

52.78

52.06

-0.12

Change

-0.04

-0.09

-0.15

-0.08

-0.22

-0.18

ICE Brent

25 Sep 17

59.02

58.43

58.03

57.40

56.50

-2.52

25 Oct 17

58.44

58.23

57.97

57.60

56.69

-1.75

Change

-0.58

-0.20

-0.06

0.20

0.19

0.77

Note: FM= future month.

Sources: CME Group and Intercontinental Exchange.

-2

0

2

4

6

-2

0

2

4

6

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Oct 17

Nov 17

US$/b

US$/b

Dubai

Urals

Sources: Argus Media, OPEC Secretariat and Platts.