WTI fob flips to premium against Ice Brent

Spot assessments for WTI fob US Gulf coast flipped to a premium against December Ice Brent today amid ample export demand.

The price of WTI fob rose by 63¢/bl to an 18¢/bl premium to December Ice Brent on 15 September, the first time WTI fob has traded above Ice Brent two-months forward since July 2022. That is equivalent to a roughly 50¢/bl premium to WTI Houston.

Mid-October loading WTI traded at a 40¢/bl premium to the secondary coastal benchmark WTI Houston on 15 September at the end of the week. Offers were heard at roughly $1/bl above the coastal pipeline benchmark before it rose to 21¢/bl over the session to a $1.99/bl premium to the Nymex light sweet crude benchmark in Cushing, Oklahoma.

Many buyers were unable to find volumes to fill a VLCC loading in the first half of October as a result of a flurry of demand to fill VLCC cargoes to Europe, South Korea, as well as other buyers in Asia-Pacific, putting upward pressure on fob and delivered pricing late in the week.

Buyers in South Korea have purchased well above their typical volumes for October loading, and Asia-Pacific as a whole has already purchased 50mn bl of US crude for October loading, 40mn bl of which is expected to be light sweet crude, according to Argus estimates.

The price of WTI loading at the Gulf coast has steadily climbed over the course of the year on rising export demand. A series of production cuts by Opec+ producers has resulted in a greater reliance on US light sweet crude internationally, causing US crude prices to rise against international benchmarks.

Pipeline markets have been buoyed as well.

Often a rise in the price of WTI Houston coincides with a decline in the Nymex benchmark on an Ice Brent basis, but the Nymex benchmark's discount to December Ice Brent narrowed by 51¢/bl on 15 September to $2.27/bl.

By Calder Jett