Stuck at the waterline

OSPs came early from both ADNOC and Aramco. But they were disappointing to many buyers who were expecting negative differentials. The spot market clearly and demonstrably traded minus during January for March loading. According to the change in structure, Arab Light should have been 30c to 60c under the Oman Dubai average. Arab Light was cut only 30c with Aramco setting the diff at flat versus the OD average! The structure implied up to a 90c fall m/m.

Asian demand is healthy, dear reader, otherwise the Saudis would have set their OSP to negativity. Even the heavier grades had a surprisingly similar move: Medium and Heavy were both cut by 40c, while Extra Light was even increased by 20c! Lighter grades outperformed the medium and heavy sours by a great margin last month – remember the UZ to Murban discount blew out by 70c to $2.10 in ADNOC’s OSPs!