Norwegian crude Grane has hit a five-month high versus the Dated Brent benchmark, lifted by buoyant trading levels on competing heavy crudes such as Angola's Dalia, sources said.
Grane was assessed 25 cents/b higher at Dated Brent minus $1.25/b Tuesday, its highest since early September, S&P Global Platts data showed.
The volume of Dalia clearing to the East had increased local demand for heavier North Sea crudes like Grane, according to traders, adding the six March-loading Dalia cargoes have been sold to end-users.
"Look at Dalia which is a competitor and has been trading at very high levels," one trader said.
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"The heavy crudes have cleared in WAF and Middle East allocations to Europe have gotten smaller. Margins are favoring heavier cuts, so Grane is looking good. Margins are OK but supply has been lower from other regions."
Dalia has seen its value soar during the March trading cycle. On Tuesday, Platts assessed Dalia at a discount of 75 cents/b FOB to the 30-60 day Dated Brent strip, its highest since August 2, 2013.
"Angola and the heavy grades have moved even further up [over the course of March trading]. it Is crazy," said one West Africa crude trader.
Dalia, along with other heavy Angolan crudes Hungo and Pazflor, have hit their highest levels versus Dated Brent in a number of years on buying from Asia as a result of a narrow Brent/Dubai EFS, lower freight rates, and tighter supply of heavy barrels globally.
OPEC production cuts which began in January have reduced the supply of heavy sour crude because most of the group's members produce this quality, which is high in sulfur and yields a good amount of fuel oil and vacuum gasoil. Due to the shortfall of heavy crude in the Middle East, China has been leaning more on such crudes from Angola, including Dalia.
"Eastern buyers are attempting to buy more of the heavier grades because currently with light sweet grades you are able to find lots of alternatives, while for heavy grades it is not as easy," said a second trader active in the Angolan crude market.
While Grane is still classified as a heavy crude, the addition of the Ivar Aasen field in December had been expected to result in a lighter Grane Blend, with an API gravity of 28.4 degrees, according to a 'simulated' assay from Statoil, compared with 19 degrees for the original Grane crude.
According to Ivar Aasen's field operator BP, the field will eventually reach peak output of 65,000 b/d.
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