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Baltic Med Crude-Urals Weakens, Opens Arb Options

April 9, 2014

Russian Urals crude weakened in the Baltic on Wednesday due to a number of unsold cargoes while Kazakh CPC continued to strengthen due to a lack of sweet barrels.

In the Platts window, Trafigura bought a cargo of Urals from Eni at dated Brent minus $1.30 a barrel, some 35 cents weaker than previous price estimates, traders said.

Total bid for a cargo of CPC at dated Brent minus 40 cents, some 10 cents stronger than previous price estimates.

The price of Urals in southern Europe moved closer to parity with dated Brent due to an absence of Iraq's Kirkuk crude, strong demand and attractive refining margins, traders said.

Urals differentials in the Mediterranean were between minus 20 cents per barrel and parity with the North Sea benchmark, traders said Tuesday.

The difference in Urals prices between the Baltic and the Mediterranean offered arbitrage potential for Urals shipments from northern to southern Europe.

"The arbitrage even works for the Eastern Mediterranean unless it's the Black Sea," a trading source said. "All major players (refineries) are basically done with maintenance."

Repsol was using NS Arctic to move 100,000 tonnes of Urals loaded on April 4 at the Baltic port of Ust-Luga to Bilbao in Spain, according to the iMap vessel tracking system on Reuters.

Vitol chartered Liteyny Prospect to deliver 100,000 tonnes of Urals from Ust-Luga to the Spanish port of Cartagena on the Mediterranean in early April.

Repsol is also likely to ship two more Urals cargoes to its refineries. The cargoes were bought at a Surgutneftegaz tender March 28 and will be loaded at Primorsk on April 18-19 and Ust-Luga on April 19-20.

Russia's idle crude distillation units (CDU) capacity is expected to drop to 60,600 tonnes a day in May from April's 113,900 tonnes a day as several large refineries will finish seasonal maintenance, according to Reuters calculations based on the Energy Ministry's maintenance schedule.

Libya's state-run Petroleum Facilities Guard took full control of eastern-most Hariga oil port on Wednesday, but a handover by rebels to the PFG had yet to happen at the Zueitina port, a PFG spokesman said.

Iraqi Oil Minister Abdul Kareem Luaibi said he expected a deal to be reached within days to resolve an oil export dispute between the central government in Baghdad and Iraqi Kurdistan.

Iraq has raised prices it charges U.S. buyers for its Basrah Light crude oil while keeping prices little changed for Asian and European consumers, the State Oil Marketing Organisation (SOMO) said on Wednesday.

(Reporting by Dmitry Zhdannikov; editing by David Evans)



 
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