EU Physical Crude Weaker Amid Rising US Imports

European physical oil markets are weakening with rising US crude imports and refinery outages in the region according to Bloomberg.

• Key contracts for difference have weakened by over $2/bbl in the last three weeks while a rally in time spreads late last month has eased, although some support has returned as futures prices have risen this week.
• A record 2.2mb/d of US crude is scheduled to arrive in Europe in March, according to vessel tracking data, a third of which will be eligible to set the global Dated Brent benchmark price.
• The inclusion of Midland WTI oil in the Dated Brent benchmark from last June has coincided with a surge in cargoes and WTI is now the dominant grade in setting the price.
• European refiners have also boosted imports from the US to replace missing Russian Urals supplies.
• The increase in crude imports from the US is likely to coincide with curtailed refinery operations due to both planned and unplanned maintenance.
• European demand is strong despite maintenance as the light, low sulfur US crude is easier to process while refineries shut down secondary units during maintenance.

Source: Bloomberg