4. S Korea shifts focus to North Sea from US for light sweet crude imports
What’s happening? The spread between Forties crude on a CFR North Asia basis and WTI Magellan East Houston on an Asia delivered basis averaged minus $1.94/b in the second quarter, Platts data shows. The spread flipped to a discount after commanding an average premium of 4 cents/b in Q1 and $1.45/b in Q4 2019. In addition, the Brent/Dubai Exchange of Futures for Swaps – a key indicator of Brent’s strength or weakness against the Middle Eastern benchmark – averaged minus $1.09/b in Q2, falling from 41 cents/b in Q1 and $2.93b in Q4 2019. A weaker EFS makes crude grades produced in the North Sea that are priced against Brent more attractive than Dubai-linked Persian Gulf grades as well as US crudes. Many Asian refiners purchase US cargoes on Platts Dubai pricing basis.....MUCH MORE
What’s next? South Korean refiners look set to increase North Sea crude purchases at the expense of light sweet US crude imports as the narrow Brent-Dubai price spread lowers the procurement cost of Forties crude, while the North American benchmark WTI remains relatively expensive. South Korea’s combined crude imports from the UK and Norway are estimated at around 5 million barrels in the second quarter and the shipments could reach at least 6 million barrels in Q3, up sharply from 750,000 barrels in Q1 and 730,000 barrels in Q4 2019, according to trading desk managers at major South Korean refiners surveyed by Platts....
HT: ZH
