Low-sulfur crude grades in the North Sea have dropped to more than four-month lows on differentials versus Dated Brent on pressure from competing grades in the Mediterranean.
On Tuesday, Norwegian North Sea crude grade Ekofisk hit a four-month low of $0.87/b versus Dated Brent, its lowest since November 14.
Oseberg was assessed down $0.02/b at plus $1.10/b, its lowest level since November 20.
The Med sweet market has looked increasingly long throughout the current refinery maintenance season, despite the continued absence of most Libyan exports, with more volumes than usual finding North European shorts as a result, according to traders.
"Med sweets are finding a home in the North," one trader said Tuesday.
Differentials for Kazakhstan's CPC Blend -- a light, semi-sweet, naphtha-rich crude grade -- dropped sharply throughout March, hitting its lowest level since July 2012 at a discount of $1.55/b to Dated Brent on Monday.
Traders said weak local demand, a closed arbitrage to the East and record long export programs for the grade in recent months created a surplus of sweet crude that is struggling to be absorbed by the local Mediterranean market.
Azerbaijan's Azeri Light also came under significant pressure throughout the month, with differentials on Tuesday hitting their lowest levels since the tail-end of October, at Dated Brent plus $2.48/b.
While the April loading program for Azeri Light out of Ceyhan is one of the longest in recent memory, market sources said the lack of a consistent arbitrage to Asia -- which typically absorbs a number of Azeri cargoes each month -- has made it necessary to find more local buyers, displacing CPC Blend.
Azeri Light is often highly valued relative to other sweet crudes because of its strong distillate yield.
Sources said additional cargoes of CPC Blend have started to move in to Northwest Europe, with outlets in the Mediterranean limited.
On Tuesday, CPC Blend FOB cargoes basis 80,000 mt were assessed at Dated Brent minus $2.755/b. Even accounting for the cost of freight into Northwest Europe from the CPC Blend terminal north of Novorossiisk in the Black Sea, the grade is nearly $2/b cheaper for delivery into the Amsterdam-Rotterdam-Antwerp refining hub than Forties, according to Platts data.
This has made it an attractive alternative for end-users in Northwest Europe who can manage the higher mercaptan content in CPC Blend.
CPC cargoes coming into Northern Europe were "not helping North Sea grades," another trader said.
While CPC regularly moves into Northwest Europe, market sources said the volume of flows has picked up as differentials for the grade dropped sharply.
"Sweet [crude] is still depressed," a source said. "[North Sea's] Forties is losing value, and CPC is really struggling."
