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OIL: US Crude to Europe to Fall as WTI/Brent Spread Narrows

OIL
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U.S. crude exports to Europe are expected to fall in January after Kpler data showed a record high of 771kb/d US exports to ARA in November, according to Reuters.

  • The transatlantic arbitrage has shut as shipping economics weaken and freight rates have climbed.
  • The WTI / Brent spread has narrowed this week to the closest spread since October 2023 at -$3.39/bbl on Dec. 18 compared to levels around -$4.1/bbl in early December and almost -4.5/bbl at the end of November and at times in October.
  • Freight rates from the U.S. Gulf Coast to NW Europe have risen around $1/bbl since November to $3.80/bbl, according to Argus data.
  • Cushing stocks remain below the seasonal five year range lows at 23mbbl despite a small gain in EIA data released this week.
  • "We would expect more limited U.S. to Amsterdam-Rotterdam-Antwerp flows in the short-term to emerge," Neil Crosby at Sparta Commodities said.
  • The spread correlation to freight rates has increased since the inclusion of WTI Midland crude in the dated Brent index.

 

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U.S. crude exports to Europe are expected to fall in January after Kpler data showed a record high of 771kb/d US exports to ARA in November, according to Reuters.

  • The transatlantic arbitrage has shut as shipping economics weaken and freight rates have climbed.
  • The WTI / Brent spread has narrowed this week to the closest spread since October 2023 at -$3.39/bbl on Dec. 18 compared to levels around -$4.1/bbl in early December and almost -4.5/bbl at the end of November and at times in October.
  • Freight rates from the U.S. Gulf Coast to NW Europe have risen around $1/bbl since November to $3.80/bbl, according to Argus data.
  • Cushing stocks remain below the seasonal five year range lows at 23mbbl despite a small gain in EIA data released this week.
  • "We would expect more limited U.S. to Amsterdam-Rotterdam-Antwerp flows in the short-term to emerge," Neil Crosby at Sparta Commodities said.
  • The spread correlation to freight rates has increased since the inclusion of WTI Midland crude in the dated Brent index.

 

Keep reading...Show less