Physical crude prices are falling further than benchmark futures in key markets in the US, Europe, and other parts of the world as the market braced for a flood of crude from Saudi Arabia and Russia. At the same time, merchants offer significant discounts on shipments.
Key markets refer to where refiners and producers trade crude oil. In these places, physical crude prices slumped more than both US and Brent crude benchmarks which have fallen to just above $20/barrel this month. At US Midland, West Texas Intermediate crude (WTI) traded at about $10/barrel on Monday, the lowest since 1998.
In Europe, key North Sea grade Forties traded at a $3.25/barrel discount to the benchmark dated Brent on Monday. Commodities traders Mercuria and Trafigura offered May cargoes of WTI-Midland for Rotterdam delivery at a discount of $3.40/barrel and $4.10/barrel to dated Brent, respectively.
WTI at East Houston (MEH) crude, one of the primary export grades in the US Gulf Coast, traded at a record-low of $6 lower than benchmark futures. Mars crude, a benchmark sour grade in the US Gulf Coast, traded at $8 below futures, the weakest since 2008.
Western Canadian Select heavy oil traded at around $7/barrel for April delivery. The prices are $13 lower than the US futures. Mexico’s Maya heavy crude weakened to $9.24/barrel on Monday, the first time it hit a level below $10 in more than 18 years. Kazakhstan’s CPC Blend dropped to minus $7.65/barrel on Friday, its historic-low level.
