London (Platts)--8Feb2013/829 am EST/1329 GMT

Kazakh CPC Blend crude differentials fell to near seven-month lows Thursday on a combination of weak demand and additional supply, with discounts to competing Mediterranean light sweet crudes at their deepest since the middle of last year, according to trading sources.

Platts assessed CPC Blend CIF Augusta down 47 cents Thursday at Dated Brent minus $0.92/barrel, the lowest since July 18.

During Platts' Market On Close assessment process, Trafigura sold to Gunvor an 85,000 mt cargo, CIF basis Augusta, loading February 24-28, at Dated Brent minus $0.90/barrel.

All Mediterranean light sweet crudes have been under pressure this year, with differentials on grades such as Saharan following a markedly bearish trajectory.

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But CPC's drop has been particularly sharp. Since reaching its 2012 high of Dated Brent plus $1.45/b December 18, CPC Blend differentials have steadily fallen, losing a cumulative $2.37/b.

"[CPC has fallen] quicker and deeper than expected," a market source said Friday.

The recent drop stems in part from added supply in the form of three injection cargoes -- two Aframax-sized and one Suezmax-sized -- into the February program at a time when refinery demand for the grade is particularly weak.

In addition, demand is currently "absolutely appalling," according to another market source.

As such, CPC's discount to its naphtha-rich regional peer, Saharan Blend, fell to its widest in nearly eight months.

Platts assessed CPC FOB at Dated Brent minus $1.86/b and Saharan FOB at Dated Brent minus $0.06/b, resulting in the widest spread, $1.80/b, since June 20.

In addition, CPC fell to a discount to Libyan Es Sider of $1.77, the most since July 9, and to Azeri Light of $3.98/b, the widest since July 18.

These spreads may be short-lived, however, as market sources said Friday that they expect the other grades to follow CPC Blend.

"Saharan is not going to be far behind," a market source said. "If CPC traded at minus $0.90, I don't know why anyone would trade for even flat for Saharan."

--Robert Mayer, robert_mayer@platts.com
--Edited by Alisdair Bowles, alisdair_bowles@platts.com

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