Growth price premium of futures for the European oil benchmark Brent to U.S. benchmark WTI and falling freight rates has allowed trading companies to start making money on the supply of American oil to Europe is the opportunity in recent months, they were deprived of due to saturation of the world oil market, as well as unfavorable supply conditions.
In the last two months, the Brent futures premium to WTI does not exceed $1, making unprofitable the supply of American oil to Europe, writes Reuters. Now, after a change in the market traders are renting tankers ready to supply overseas, told Reuters and Bloomberg freight brokers. The premium of futures for the European oil benchmark Brent to U.S. benchmark WTI exceeded $1.5 per barrel on Thursday, 21 July, reaching a three-month high. Friday night, Brent was worth $1,41 more expensive than WTI, follows from the data Bloomberg terminal.
The increase in the spread WTI-Brent will contribute to increasing the supply of oil from U.S. refineries in Europe, Venezuela and possibly Asia in the short term, told Bloomberg Stefanos, Kazanis, expert in the freight market in the consulting company McQuilling. The resulting spread for us oil supplies to Europe may be limited, according to Reuters. Us oil exports to Europe will grow, leading Bloomberg forecast the Vienna research company JBC Energy.
As told to Reuters freight brokers, interest in the lease of tanker of type “Aframax”, capable of carrying about 700 thousand Barr. oil has increased, evidence that the trading companies are preparing to supply oil for export, the Agency said. “In the long term, we expect stable and a slight spread of WTI-Brent in the background of the return of the oil reserves in the United States to the level of previous years, said Reuters David Amand of analytical Navigistics Consulting company, specializing in Maritime consulting. — Before this happens, you can expect an increase in the number of arbitrage transactions”.
Usually, traders sell oil at the market where it is worth more than all, benefiting from price differences in different markets and terms of delivery — transactions, which are called arbitration. Four trader told Bloomberg that arbitration is now profitable, and four others claim that, despite the improved situation, they are not planning transactions. According to the Agency, in July traders are chartering tankers to deliver oil from the Gulf of Mexico to Europe. First in the queue for delivery to Europe is crude oil, and varieties from fields in the Eagle Ford and Texas/Oklahoma, told Bloomberg traders.
Swiss trader Vitol this week has chartered two Aframax, told Reuters three sources in the market. Both ships are rented at a discount of 40-45% to the standard freight rate, from the data terminal Thomson Reuters Eikon. Traders can maneuver like trying to put oil anyone who’s willing to buy it, the Agency said one of the brokers.
In December 2015, President Barack Obama lifted the ban on us oil exports, which has operated for the past 40 years. In this case since the possibility for the supply of American oil abroad was limited due to a glut on the world market and unfavorable terms of supply. However, oil exports from the United States began to grow.
In may this year, the index rose to a record 662 thousand barrels. per day — the highest level since 1920, according to the American statistics. The first 40 years, the export contract was signed in the US in late December of last year. The largest importer for the reporting month was Canada, which received 308 thousand barrels. Followed by the Netherlands (110 thousand Barr.), Curacao (67 thousand barrels), United Kingdom (36 thousand barrels), Japan (29 thousand barrels). and Italy (23 thousand Barr.).