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Mars crude premium swings down by over $8/bl: Update

  • Market: Crude oil
  • 10/03/26

US crude values tumbled on Tuesday after President Donald Trump suggested the US-Israel war on Iran could end soon, signaling a potential end to Middle East supply disruptions.

The Nymex WTI futures contract dropped by over 12pc on Tuesday to around $83/bl, the largest drop in four years, reflecting the value of Domestic Sweet (DSW) crude in Cushing, Oklahoma.

Crude differentials for US pipeline grades also tumbled, with Louisiana-delivered Mars settling at $87.65/bl, down by about $20/bl from Monday's Argus outright assessment.

Medium sours are falling from multi-year highs after eight straight daily gains. These grades are particularly affected by the war because most US imports of crude from the region are of similar quality to US Gulf sours. They also have higher distillate yields than lighter grades, making them more valuable with the Middle East also being a large exporter of jet fuel and diesel.

The Mars volume-weighted average premium of $4.20/bl was about $8.50/bl lower than on Monday. The swing from Monday's high to today's low was about $10/bl. The medium sour's assessment was at a roughly $2.40/bl premium to June Ice Brent, narrowing from a $13.80/bl premium Monday.

In Texas, Southern Green Canyon (SGC) traded as low as parity to DSW, down from the prior session's $7.07/bl volume-weighted average premium.

Light sweet premiums to the benchmark also fell. Permian-quality WTI at the Magellan East Houston (MEH) terminal settled at $84.88/bl, down from last session's $96.72/bl and $1.95/bl volume-weighted average premium.

With prompt futures prices easing more than forward prices, the narrowing backwardation within the market pressured the DSW premium to CMA Nymex. Its premium narrowed for the first time in three sessions to a volume-weighted average of $3.20/bl as represented by the Argus WTI differential to CMA Nymex. On Monday Argus' WTI Differential to CMA Nymex settled at its highest volume-weighted average on record.

The Argus WTI differential to CMA Nymex trade month average is a commonly used component in many US pipeline crude physical contracts to adjust the average futures price during the delivery month for the level of backwardation or contango in the market when the delivery month was prompt.  

For April trade, this means that the final trade month average for the Argus Diff to CMA Nymex will be added to an average of May and June Nymex prompt-month settlements during the calendar month of April to price many April-delivery crude volumes.


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