EU Refiners Ramped up US WTI Imports

High prices for North Sea sour crudes are prompting European refiners to switch to sweeter grades, in particular US WTI, with loadings of the grade into Europe rising 25% month on month in July according to Argusmedia.

• Loadings of US WTI to Europe rose to a record high of more than 2mbpd in July, up from 1.6mbpd in June, tracking data show. Last year, shipments averaged 1.18mbpd.
• Prompt WTI supplies have been looking a more economic option than local medium sour grades Johan Sverdrup and Grane from Norway/ Johan Sverdrup and Grane both surged to their highest premiums in a year to benchmark North Sea Dated at $3.50/bl and $4.10/bl, respectively, in July.
• This put the two regional sour crudes on a fob basis nearly $2/bl above both WTI on a delivered-to-Rotterdam basis and North Sea light sweet crudes, such as Ekofisk, on a fob basis, prompting some European refiners to switch to the sweeter grades.
• Demand for Johan Sverdrup by contrast has been weak. A number of August-loading cargoes of Johan Sverdrup were still unsold over the 1-10 August period and the September-loading programme is almost entirely available, according to market participants.
• Weak demand may be encouraging some deliveries of Johan Sverdrup into storage instead, according to some traders.
• Increases by Saudi Aramco to its OSPs would normally help support demand for local sour crude alternatives, such as Johan Sverdrup, which has not been the case.
• The switch to sweeter grades has weighed on regional sour crude values for August. Johan Sverdrup has fallen by almost $2.80/bl since mid-July to just a 71¢/bl premium to North Sea Dated as of 10 August.