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Urals differentials to Dated Brent tumble on stronger supply

http://www.chemnet.com   Mar 04,2015 Platts
Urals values in Northwest Europe and the Mediterranean have tumbled over the past several sessions as the temporarily tight supply situation that saw prices pick up throughout the second half of February has eased, sources said.

"It is just a supply thing, but we also have not seen the usual demand [this month]," a crude trader said.

CIF basis Rotterdam Urals cargoes were assessed at a discount of $2.15/barrel to the Mediterranean Dated Strip Monday, the lowest level against the 13-28 day forward Dated Brent curve since early January, according to Platts data.

Northwest European Urals cargoes have shed $1.40/b since February 16, and market sources said a significantly longer second half of March loading program out of the Baltic Sea has contributed to the bearish sentiment in the prompt market.

Scheduled exports out of the Baltic Sea port of Primorsk -- which sees the bulk of Urals loadings -- in March are set at 3.5 million mt, with 2.3 million mt slated for the second half.

"I think that people were holding off on their [supply] decisions before they saw the whole program," a crude trader said of the fall in the Urals market this week.

"No one wants to get caught catching a falling knife...They may expect to be able to buy it cheaper in the next few days."

The Mediterranean market has also tumbled over the past week, as weather delays across the Persian Gulf, Mediterranean, and Black Sea saw end-users look toward other prompt crude barrels to make up the gap in deliveries.

Aframax Urals cargoes, basis CIF Augusta, were assessed at a $0.20/barrel discount to the Mediterranean Dated Strip on February 24. On Monday, they were assessed at a $1.385/b discount.

"There was a period when [the north] and the Mediterranean saw better demand because [of weather delays] and Urals was the promptest barrel," the first trading source said. "But now that those weather issues are gone, it is back to normal."
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