Heavier, sour US crude prices fall on high supply, global demand concerns

Values for heavier, sour crude oil grades available on the US Gulf Coast have dropped as the outlook for global demand deteriorates, production remains strong and the deadline to implement low sulfur standards for marine fuel approaches. The front-month differential for benchmark medium sour crude Mars plunged to WTI plus $2.40/b on June 27, which was its lowest assessed level since August 28, 2018. The Mars differential has recovered slightly in recent days, and was last assessed July 10 at WTI plus $3.65/b. However, Mars and other Gulf Coast sour crudes have been on a downward trajectory since May. The 30-day rolling average for the Mars differential is about $4.70/b. The previous 30-day average was about $5.65/b. Mars hit a four-year high in February, when it was assessed at WTI plus $7.90/b. Several factors could be weighing on sour crudes in the US Gulf Coast, including a lack of demand and an overflow of output. The majority of US sour crude production comes from the Gulf of Mexico, which is producing around 2 million b/d of oil – and that output is growing. Shell announced in May that production started at its Appomattox floating production system, months ahead of schedule.… continue reading

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Source: CTRM Center

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