Middle East crudes cash differentials at multi-month lows as oil demand dissipates

Cash differentials for Middle East sour crude oil grades have fallen to multi-month lows after demand dissipated while supplies remained available for May-loading cargoes, traders said Thursday.

Qatar Marine crude was assessed at a discount of 65 cents/b to the grade’s official selling price, the lowest since November 18, 2015, when it was assessed at a discount of 70 cents/b to, S&P Global Platts data showed.

May-loading cargoes of Qatar Marine have most recently traded at discounts of 60-75 cents/b to the grade’s OSP, trade sources said, adding Glencore could have sold a cargo to Shell within that range.

The indicated values reflected a sharp decline in cash differentials for May-loading Qatar Marine from trades earlier in the month.

Earlier this month, the crude was said to have traded from around parity to its OSP to small discounts. Last week, it was said to have traded at discounts of around 20 cents/b to its OSP, traders said.

The recently traded levels indicated unsold May-loading barrels were under distress amid a lack of buying interest towards the end of the May-loading trading cycle, traders said.

“The nature of Qatar Marine, nature of everything right now…[is] all very volatile. [The market has] no shape. Everything has to sell or [it will be] very expensive to carry [forward],” a Singapore-based crude trader said.

Few fresh trades were heard after Taiwan’s CPC concluded its Middle East sour crude tender last week, the traders said.

Traders have said that the tender could be seen as the last opportunity for sellers to offload May-loading cargoes.

In its tender, CPC was said to have purchased one Qatar Land crude cargo at a discount of around 40-45 cents/b to the grade’s OSP. CPC was also heard to have purchased more than two May-loading Upper Zakum crude cargoes and a cargo of a Kurdish Blend crude, traders said.

“Post-CPC tender, there are still unsold [cargoes] out there, [but] all [are now] under the radar,” another Singapore-based crude trader said.

Reflecting the weak market, Qatar Land was assessed at a discount of 50 cents/b to its OSP, the lowest since March 31, 2016, when it was assessed at a 55 cents/b discount, Platts data showed.

Similarly, Abu Dhabi’s Murban and Das Blend crudes were assessed at discounts of 40 cents/b and 35 cents/b, respectively, to their OSPs.

Murban’s cash differential was the lowest since July 14, 2016, when it was assessed at 45 cents/b discount to its OSP, while Das Blend’s cash differential was the lowest since August 31, 2016, when it was assessed at 45 cents/b discount to its OSP.
Source: Platts