Crude draws in the US boost WTI vs Brent, but prompt waterborne fob keeping WTI attractive into NWE and Far East against North Sea crudes in particular
The outright price fell significantly on Friday, with commodities following the broader market trend of selling off amidst last week’s disruptions caused by Crowdstrike.
The sell-off has persisted today. However, refinery margins remain within workable ranges, crude spreads are near seasonal record highs, and physical pricing for key grades remains robust.
It appears that the decline in outright prices is not primarily driven by concerns about the health of the crude market itself.

(Source: EIA)
The biggest mover in terms of pricing continues to be the narrowing TI/Brent spread as WTI in Cushing in particular prices higher on curtailed supply and strong regional demand.
PADD-3 intakes took less of a hit than expected following Hurricane Beryl’s arrival, and with crude exports sitting at a solid 4m b/d in the latest EIA figures, there was also little to show in terms of reduced exports.
The narrowing TI/Brent spread was expected to negatively impact the relative economics of placing WTI.
However, softer prompt FOB prices for waterborne WTI, combined with an uptick in much of the North Sea and WAF crude markets, have kept WTI as the cheapest source of WoS light-sweet crude for Asia.
Going forward, this is likely to need to readjust once more, with physical differentials for WTI as well as freight assessments for loading out of the USGC likely to pick up as WTI remains attractive to ship both East and West.
With WTI trading in a solid backwardation still, we should expect to see inventories in Cushing continue to draw through the summer, raising questions over the shape of the TI/Brent forward curve which sees a widening of the spread in the months ahead.
Of course, it is possible that expectations are for the North Sea to also strengthen through the remainder of Q3, and indeed despite some surprise weakness in the Johan Sverdrup FOB price, both the DFL and dated-linked crude fob prices have been performing well recently.
Indeed, with the outlier year of 2022 removed, the prompt DFL is currently trading at historical seasonal highs and belies talk not too long ago of a North Sea market struggling to clear cargoes.
JS fell to a multi-month low despite some indications that European demand was picking up.
It seems that being an attractive option for the USAC was not enough to support physical prices, given the competition from other medium-density grades from the Middle East and WAF into Europe.
However, the latest deal levels for JS have opened opportunities in WCI, Singapore, and the Far East.
Therefore, we expect FOB prices to rise again soon, despite continued local competition, as JS remains a sought-after grade for buyers in the East when the opportunity arises.
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