Physical North Sea lacks outlets
Commentary summary:
- North Sea light sweet arbs look increasingly closed to the Med.
- Light sweet premia in the Med/Black Sea/WAF under pressure.
- WTI export avails likely to be on the rise over the coming weeks.
- Chinese fuel oil tax changes likely not much of boon for crude imports.
The market is still in wait and see mode regarding Israel’s response to Iran. As time goes by there is greater tendency towards risk-off as is ensuing today in flat price and time-spreads. There always appears to be something to rescue the Brent market. Last month it was Libya, this month it is Middle East flare-ups. However, the physical market is showing little to no signs of turning around and remains in reasonably poor shape.
Focussing on the North Sea market, pressure continues to accumulate. Black Sea fobs are plummeting, particularly Azeri Light, which is now landing in NWE on par with WTI on a Suez. Azeri and Saharan Blend cracking margins are both higher than Forties in NWE.
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