WTI’s fight to stay cheap in Asia lands it cheaply in Europe
Commentary summary:
• North Sea still bearish from the arb-perspective with econs East closed and WTI landing cheaply. The EFS is narrow already but could even narrow further.
• WTI/Brent paper is wide enough from the perspective of WTI landed values in Europe/Med.
• But WTI is fighting to stay competitive against Murban in Asia; Murban still commands a slight edge from the margin perspective so as US domestic stocks build, WTI needs more outlets.
• Margins on European crude in Asia are now negative, while overall the margin picture in Asia has weakened markedly.
ICE Brent M1/M3 settled above $1/b on Friday for the first time in six weeks. Spreads have continued to gain even as macro fears mount, with flat price lending some short-term support over the weekend amid US strikes on the Houthis.
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