- Gennaio 19, 2022
- Posted by: Oliver
- Categoria: Economics, Finance & accounting
However, major spot crude oil benchmarks dropped by about 9% in December m-o-m, extending November’s losses. The drop was driven by a sharp decline in futures markets amid concerns about record-high COVID-19 cases, including in several major oil-consuming countries, which could affect oil demand.
Nonetheless, physical crude oil market fundamentals remained relatively robust in December, reflected in firm buying from refineries and healthy refining margins in all major refining hubs, combined with several crude supply outages that reduced short-term availability. Declining commercial OECD stocks ‒ to below the last five-year average ‒ continued to support the crude market.
The North Sea Dated premium to ICE Brent in the first half of December averaged 32¢/b, but the spread flipped to a discount in the second half of the month after ICE Brent recovered.
In Europe 16 nations, crude stocks fell in November by 11.97 mb compared with the previous month to
426.83 mb. Declines additionally took place in gasoline, naphtha and fuel oil stocks. Meanwhile, the European refinery crude intake in November rose by 0.28 mb/d m-o-m to 9.62 mb/d.
Similarly, crude stocks in the US fell for six consecutive weeks, declining by 16.2 mb between the weeks of 19 November and 31 December.
Firm buying for January and February loadings from Europe and Asia buoyed spot crude markets amid favourable west-to-east arbitrage and a weakening Brent backwardation structure. China’s crude imports rose strongly in November from an October multi-month low. Data from the General Administration of Customs shows that China’s crude imports in November rose to 41.79 million mt, representing a 10.5% increase m-o-m, while that of the National Bureau of Statistics (NBS) shows the output of processing volumes of crude oil in the same month rose by 2.1% m-o-m to 59.64 million mt.
In December, North Sea Dated fell by $7.27, or 8.9%, to an average of $74.10/b. WTI and Dubai first month figures decreased respectively by $7.24 and $6.98, or 9.2% and 8.7%, to settle at $71.87/b and $73.31/b.
Supportive fundamentals in the physical crude market offset concerns about lower demand due to the spread of the Omicron variant, which helped keep crude differentials buoyed in December and most light sweet grades priced on a monthly average at premiums to their respective benchmarks. Firm light and middle distillate margins in Europe, specifically for naphtha and gasoline, supported light sweet crude in the Atlantic Basin. In the North Sea, although Forties and Ekofisk crude differentials fell slightly on a monthly average, they traded at a premium to North Sea Brent before weakening on the availability of unsold prompt loading cargoes. Forties and Ekofisk crude differentials averaged 42¢ and 9¢ lower, respectively, in November to stand at 23¢/b and $1.29/b. North Sea crude flow to Asia lowered availability in Northwest Europe, adding support to prices. West African and Mediterranean crude differentials were also supported by healthy European refining margins, good demand from refiners in both Europe and Asia, and supply outages in Libya that supported similar crude quality.
Bonny Light and Qua Iboe crude differentials were unchanged in December m-o-m, averaging premiums of 40¢/b and 88¢/b, respectively, to North Sea Dated, while Forcados crude differentials fell by 15¢/b m-o-m to a 72¢/b premium to North Sea Dated. During the same period, Cabinda crude differentials fell by 9¢ on average to a 34¢/b premium, while the crude differential of Dalia rose 3¢ to a premium of 31¢/b. Saharan Blend crude differentials were on average 14¢ higher m-o-m in December, to an average premium of $1.01/b to North Sea Brent. The Caspian CPC Blend differential fell in December by 3¢ to a discount of 34¢/b on average.
In the US, the value of crude differentials in the USGC rose strongly in December on rising regional demand and sustained exports amid lower freight rates, which offset the availability of additional sour crude from strategic petroleum reserves (SPR). Light Louisiana Sweet (LLS) and Mars crude differentials increased in December, rising on monthly average by $1.70 and $2.87, respectively, to a premium of $1.99/b and a discount of 51¢/b. In the Middle East, however, the value of Oman crude differentials fell m-o-m by $1.85¢ in December to a premium of $1.50/b.
