Poor refining margins and brimming storage tanks have halted weeks of rallies in physical oil prices, traders and analysts said. Refining margins have improved slightly but remained just above record lows during the height of the COVID-19 pandemic. At the same time, European and Chinese refiners cut their runs amid high crude and product inventory levels.
Congo’s Djeno and Angola’s Dalia grades are offered at $1/barrel lower than last week at around a $1/barrel premium against dated Brent. Spot offers for Abu Dhabi’s light sour Murban were at almost $1/barrel discount to their official selling price. CPC Blend prices have fallen by nearly a dollar from early June, but traders said that it remained 20-30 cents away from profitability.
In the US, physical prices in the Permian and Bakken basins were under pressure after producers decided to reverse about a quarter of the volumes they shut. China has contributed to most of the current demand uptick. However, trading sources said that independent refiners had been reducing runs while waiting for new import quotas from the government.
