Kazakhstan's CPC Blend crude has fallen to a 23-month low versus Dated Brent, as weak end-user demand has continued to weigh on values for prompt supplies.
CIF Augusta CPC Aframax cargoes were assessed at a $1.73/barrel discount to the Mediterranean Dated Strip Tuesday, down $0.365/b day on day to the lowest level since mid-July 2012, according to Platts data. The previous 2014 low was the $1.57/b discount seen April 2.
In the Platts Market On Close assessment process, a Vitol offer for an 85,000 mt CPC Blend cargo loading July 3-7 CFR basis Augusta was left outstanding at Dated Brent minus $1.70/b at the close Tuesday.
The decline could be partly related to recent weakness in European naphtha, which has hit the refining yields of naphtha-rich grades such as CPC and Algeria's Saharan.
The naphtha market in Northwest Europe weakened Tuesday due to physical length in the prompt and lower gasoline blending demand, trading sources said.
In particular, the physical premium for CIF NWE naphtha cargoes over the front-month swap fell $2/mt to $4.50/mt, its lowest level in four months, Platts data showed.
"The naphtha market continues to weaken because it is oversupplied and there is no demand," said a naphtha trader.
"The prompt has an overhang as petchems do not want second half of June barrels and gasoline blending is quiet still," another trader said, adding the market was bound to soften further.
Offers for naphtha-rich Saharan Blend have dropped below Dated Brent plus $0.25/b for mid-July barrels, crude traders said. Saharan typically trades further forward than other Mediterranean sweet crudes, and the continuing availability of July barrels means the grade is trading well behind schedule.
"As you can see, everything is down," a crude trader said, pointing to poor refinery margins. "On CPC, I do not know what the bottom is."
Additionally, the prospect of fresh light sweet crude exports from Libya in coming days has added to the weight in the market, sources said.
"Zueitina is producing at a low rate, but one cargo is loading from fresh production," a crude trader said. "At the same time, Mellitah has also resumed production...All in all, sweet supply is increasing and refining margins are not good at all."
