Continues to publish Dated BFOET assessment to help the market understand WTI’s impact
London, 2 May 2023
Global energy and commodity price reporting agency Argus will include Midland-quality WTI in the basket of six eligible crude grades in its North Sea Dated assessment from today. To aid market transparency, Argus will continue to publish its legacy price assessment based on the lowest priced of the existing five crude grades in the basket — Brent, Forties, Oseberg, Ekofisk and Troll. This assessment is called Dated BFOET. The continuation of this price will help market participants understand the impact of WTI in setting the North Sea crude price as it undergoes historic change.
In anticipation of the addition of US crude to the North Sea crude pricing basket, Argus began publishing its assessments of Midland WTI cargoes delivered to Rotterdam in September 2018 and a version of North Sea Dated including delivered WTI in February 2019. Based on exclusive analysis of these price series, Argus is the only price reporting agency able to shed light on the full price impact of the leading US grade on the North Sea light sweet crude complex. Since February 2019, the Argus New North Sea Dated price including WTI would have been 67¢/bl lower than the prevailing benchmark on average, and WTI would have set the New North Sea Dated price 49% of the time. At its peak differential, on 30 March 2020, WTI would have lowered the New North Sea Dated assessment by $5.42/bl.
The future of Brent as a global crude benchmark has been called into question by the sharp decline in the volume of light sweet crude available for delivery into the basket over the past two decades, despite the addition of other European grades. US exports of WTI Midland to Europe were more than 900,000 b/d in 2022, significantly more than combined production of the five crude streams contributing to the Brent marker of 670,000 b/d. Midland WTI traded at US Gulf coast hubs has unrivalled liquidity, transparency and diversity of participation, cementing the grade’s status as a base-load crude for global refiners and an integral component of global crude price discovery.
Argus Media chairman and chief executive Adrian Binks said: “We first suggested including Midland-quality WTI into the North Sea Dated basket in 2018 as part of our ongoing consultation with market participants to address the North Sea liquidity issues. By publishing both a New North Sea Dated assessment that includes US WTI Midland crude delivered to Europe, together with the existing BFOET Dated assessment, we are able to enhance transparency and help market participants understand the impact of these important changes to the North Sea marker. Market participants have increasingly chosen to adopt Argus benchmarks as the standard for trading of Midland-quality WTI around the world.”
Since 2006, Argus has been the primary source of price discovery for WTI at the key trading hubs of Midland and Houston, and from Gulf coast ports since 2015, when exports of US crude were legalised. These prices have become the basis of one of the world’s largest crude derivative markets, which in the first quarter of 2023 reached a trading volume of 10.9mn b/d, almost double any previous quarter. Argus now offers the most comprehensive coverage of WTI, both domestically within the US pipeline complex and export hubs and at key delivery locations in Europe and Asia.