US oil exports: WTI fob rises against WTI Houston

Assessments for waterborne WTI loading at the US Gulf coast rose against WTI Houston as wider refinery margins helped drive up domestic crude demand.

WTI loading at the US Gulf coast inched up by 3¢/bl over the week against August Ice Brent to a discount of $2.70/bl on 18 May, while rising by 14¢/bl against the secondary coastal benchmark WTI Houston to a 46¢/bl premium over the same period.

US Gulf coast refinery crude throughputs rose by 117,000 b/d to 9.05mn b/d last week, according to US Energy Information Administration data, as the US moves further into its driving season. That increased utilization in the region to about 98pc. As refinery runs rise, less crude is available for export from the US.

Crack spreads at the US Gulf coast have also been widening after narrowing through April. US Gulf coast margins, as measured by a 3-2-1 WTI crack spread rose by about $2/bl over the last week to just over $29/bl on 19 May.

In the sour crude market, President Joe Biden's administration is preparing to start refilling the US Strategic Petroleum Reserve (SPR) by purchasing up to 3mn bl of sour crude for delivery in August to the Big Hill SPR site near Beaumont, Texas.

Demand for crude loading in June on VLCCs slowed this week as the market approaches the end of the US June pipeline trade cycle. About 25 VLCCs have been purchased for June loading, according to market participants, with 15 headed to Asia and 10 to Europe. VLCC rates to Northeast Asia and Europe from the US Gulf coast steadied this week following gains last week.

The Aframax rate to Europe rose week over week, while the delivered price of WTI on an Aframax vessel to the Netherlands port of Rotterdam fell, further eroding the arbitrage to Europe. Values for WTI arriving in June were pegged at $1/bl above North Sea Dated cif Rotterdam, a 35¢/bl drop from assessments a week earlier and a five-month low.

More signs that China's economic recovery might be slowing emerged this week. China's industrial production in April rose by 5.6pc from a year earlier but was 0.47pc lower against March, according to National Statistics Bureau (NBS) data.

Crude throughputs in China eased to 14.5mn b/d in April, down by 2pc compared to March levels on refinery turnaround activity, but throughputs were up by 18pc compared to a year earlier. Refinery runs will likely dip further this month as intensive maintenance continues.

State-controlled refiner PetroChina plans for 540,000 b/d of capacity to have maintenance this month. The 60,000 b/d Shandong independent refiner Kenli and state-controlled CNOOC's 120,000 b/d Taizhou refinery this week started 40-day and 45-day turnarounds, respectively.

By Calder Jett