Summer WTI-Rott arb closure still looking likely

• May schedules show strong US crude exports to both Asia and Europe. This reflects the very cheap WTI arb signals of the last few weeks combined with Asia’s scouring of the Americas market for volume.
• We are locking in forward US-Asia flow for June and July load currently, with Japan already picking up >10 mbbls for August delivery. More is to come.
• As I’ve said before, WTI Afra-NWE flows, fixed on shorter timescales, are going to have to drop off if Asia’s pull on WTI maintains this pace or even accelerates. That will require US commercial stocks (including Cushing) to have to drop low enough, which at recent rates of draws, will take 1-2 months yet. SPR release is slowing the pace on the commercial side. So until then, WTI/Brent is going to be subject more to headline swings and cycles in TD25. However, incrementally it may make sense that WTI vs Forties arbs don’t disconnect to the extent we saw in early Q2 over the coming weeks. US export bans are a tail risk to this one.
• Short-term, while WTI looked cheap into Europe at week begin, even more declines in North Sea premiums, plus the relative Brent futures sell-off today, have cut WTI Afra discounts into NWE entirely, with Forties landing now at parity for mid-June. That’s perhaps more a signal for TD25-related freight to cool now (14-day ahead Afra counts are up too on the USG). It isn’t yet a story about low US stocks closing off the arb.
• North Sea arbs still look very closed to the East vs WTI. But the Brent sell-off this morning has put Agbami and Forties at only $1.00-2.00/b landed premiums to Murban for July.

About the Author
Neil is a senior oil market analyst specialising in crude oil, refined products, and biofuels, with particular depth in refining economics, fundamental strategy and price modelling. He has held analytical roles at OilX and JBC Energy, and his market intelligence is regularly cited by Reuters, Bloomberg, and the Wall Street Journal.
Connect: https://www.linkedin.com/in/neilcrosbyuk/https://x.com/NGCanalyst

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