The Northwest European Urals differential has moved to a premium to the lighter Forties crude grade for the first time in nine months, as supplies of the Russian sour crude tighten and demand for the North Sea grade slackens, market sources said Wednesday.
Platts assessed Urals CIF Rotterdam Tuesday at Dated Brent minus $0.20/barrel and Forties FOB North Sea at Dated Brent minus $0.26/b.
The reversal represents the first for the two grades since August 14.
The 32.0 API, 1.3% sulfur Urals is historically at a discount to the 40.3 API, 0.85% sulfur Forties. Urals was at a premium to Forties for a combined 11 days in 2012.
In 2013 so far, Urals reached its widest discount to Forties on February 28, when it was $3.01/b.
Urals differentials have been hovering at or near nine-month highs in recent days amid tighter supply and comparatively better sour refining margins.
The June 1-11 Urals loading program that emerged midweek showed a 22% drop in volume and average daily loading rate from the same period in May.
"We see the market pretty strong, the program is quite short compared to May," said a source with one European refiner. "We can expect Urals to keep these high levels."
The North Sea Forties market, in contrast, has been depressed in recent days by soft demand, particularly at the prompt, combined with an overhang of unsold cargoes.
"Urals is doing well, and Forties looks cheap compared to it," a North Sea trader said Wednesday. "There has been an overhang of prompt Forties cargoes depressing the market."
With Forties having fallen by a cumulative $0.49/b in only a week, however, traders said that the grade was starting to look attractive to buyers, particularly as a replacement for Urals in Northwest Europe.
"I think Forties looks like great value," the first North Sea trader said. "People don't seem to want to touch it [at the prompt]. It doesn't make a great deal of sense, although I haven't seen the switchers coming in yet."
