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Russian crude Urals at its highest so far this year on strong month-end demand

London (Platts)--10 Apr 2017 942 am EDT/1342 GMT


Russian crude Urals for loading out of the Black Sea port of Novorossiisk has spiked over 90 cents/barrel last week, to stand at its highest of the year so far, due to strong month-end demand for Urals.

CIF Augusta-delivered Urals crude was assessed at Dated Brent minus $0.98/b Friday, up 21.5 cents/b day on day, to stand at its highest since December 5.

All through last week, Urals loading from the Black Sea port of Novorossiisk gained 92 cents/b, as Litasco repeatedly appeared in the Platts Market on Close assessment process as a bidder, looking for cargoes loading between April 25-29, and while the company was sold a cargo Tuesday and Wednesday by Vitol, which increased prices day on day. Litasco and Tenergy -- who appeared offering the cargo Litasco was looking for in the MOC process Thursday and Friday -- did not cross each other, which was one of the reasons of the price increase over the past week.

On Friday, Litasco's bid was outstanding at Dated Brent minus $0.80/b, while Tenergy's offer was outstanding at the end of the MOC process at Dated Brent minus $0.60/b for the April 26-27 loading Aframax Urals cargo.

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Sources said that the increase has come from a largely unexpected Asian demand for Urals as four out of the eight April-loading Suezmaxes have been said to be going to India.

"You can see a very nice flow of Urals at the moment," a trading source said. "Urals from the Baltics flow to the Mediterranean, as Urals from the Mediterranean flow to Asia."

CIF Rotterdam Urals loading out of the Baltic ports of Primorsk and Ust-Luga were assessed at Dated Brent minus $2.035/b, which was also up a staggering 45.5 cents/b between Monday and Friday but ultimately still increased the arbitrage between CIF Rotterdam and CIF Augusta Urals by 45.5 cents/b during the week.

Further, the Exchange of Futures for Swaps has been on a continuous downward trend since May, when the front-month EFS stood at over $3.90/b.

At the end of March, the front-month EFS had reached a year-and-a-half low, breaking through $1.20/b.

By Friday, the EFS had reverted slightly to $1.28/b.

"Despite demand from the East not having been that strong for the April Urals program, the narrow EFS at the end of March led to some Indian refineries sourcing Russian crude," a second trader said.

Market sources said that India's state-owned Indian Oil Corp. and privately owned Reliance were behind the Urals buying, but this could not yet be confirmed with the two parties involved.

--Marcel Goldenberg, marcel.goldenberg@spglobal.com

--Edited by Arnab Banerjee, arnab.banerjee@spglobal.com

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