In the LOOP: Narrowing Dubai/LOOP spread dampens US sour crude exports

Narrower price spreads between US crudes and Dubai-based crudes have limited arbitrage opportunities to export US crude to Asia recently, S&P Global Platts data shows. However, some deals continue to get done as US crude delivered to Asia remains at a slight discount to competing grades. In the first 29 trading days of 2019, the spread between LOOP Sour and Dubai has averaged about $2.60/b. That is compared with an average spread of $2.75/b during the same period a year ago. As Dubai’s premium over LOOP decreases, US-based sour crudes become less competitive with comparable Dubai-based grades in export markets. The Dubai/LOOP Sour spread reached its widest point of the year so far on January 11 at $5.11/b. Its narrowest point of the year came January 25 at 90 cents/b. The LOOP Sour-Dubai spread has been mostly narrowing since the fall as US Gulf Coast sour crude differentials have soared in recent weeks. US crudes, particularly sour grades, have jumped on concerns over the supply of medium and heavy sour crudes due to OPEC production cuts and uncertainty arising from US sanctions on Venezuela. The 10-day moving average between LOOP Sour and Dubai was $2.40/b on Monday compared with $3.60/b… continue reading

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Source: CTRM Center

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