The tightness in the sour crude market in Europe and a recent resumption of Libyan crude export flows have combined to push sour and sweet crude differentials in opposite directions.
In the Urals crude market, maintenance in the Baltic Sea port of Primorsk over October 17-21, and delays through Turkey's Bosporus and Dardanelles Straits have led to a shortage of prompt supplies in both the Mediterranean and Northwest European markets, pushing the grade's differentials to new highs.
Sweet crude grades meanwhile were under pressure as Libyan crude barrels come back into the market after the Sarir and Mesla fields production resumption on September 11, and a weak naphtha crack was impacting demand for light barrels.
Urals crude differentials in Northwest Europe rose to Dated Brent minus $0.225/barrel on Wednesday after being at minus $1.83/b September 28, with some trading sources expecting to see values reaching Dated Brent flat in the near future.
In the Med, the grade's levels stood at Dated Brent minus $0.475/b on Wednesday after drifting to minus $1.35/b on September 28.
"There is nothing available in storage because of Brent backwardation, so the market is extremely tight on prompt...refiners have been minimizing storage and then they saw margins improved so they rushed to buy [Urals], creating backwardation in other markets," said one trading source.
Another trading source said: "There is good demand [for Urals], HSFO cracks are high, margins are good. North Sea is tight and Urals crude supply is tight."
The values of Azeri Light meanwhile softened to Dated Brent plus $4.025/b, as assessed by Platts Wednesday, but were still receiving support from smaller volumes exported in November due to the planned maintenance in Azeri field over October-December.
The sweet Azerbaijan's grade reached its record high level of Dated Brent plus $5.53/b on September 9, Platts data showed.
Further weakness was expected in the CPC Blend and Saharan Blend markets with poor naphtha cracks putting pressure on grades.
CPC Blend differentials dropped to Dated Brent plus $0.70/b, the lowest level since August 3, when the grade was assessed at plus $0.51/b.
As for Saharan Blend, the values of the naphtha-rich Algerian grade eased to Dated Brent plus $1.825/b.
"CPC Blend and Saharan seem to be coming off due to weak naphtha, but for Azeri, due to a shorter program and seasonal demand for distillates, I do not think it is down. Bosporus delays may bring more demand into the Med," said one trader.
Another trader in the Med reported: "Naphtha crack is coming down massively, freight is expensive and arbitrage [for CPC Blend] to NWE is closed. Forties is far apart to be replaced with CPC, it has to come off further to open the arb....[But] Urals is in a different shape, fuel oil crack is getting up today."
