ESPO costs reduce to six-month low on soft need, narrow EFSCosts for April-loading Far East Russian ESPO Blend crude oil touched a close to six-month short on Thursday as warm demand as well as a weak market framework pressured premiums reduced, trade resources said.
The M1 April packing ESPO premiums were evaluated at .30/ b to Platts front-month Dubai unrefined analyses since 4:30 pm Singapore time (0830 GMT) Thursday, according to S&P Global Platts data. The last time the costs was lower was on August 20 where it stood at .2/ b to Dubai.
Softer demand from China, the most favored destination for the Russian barrels, was pointed out as a strong reason for the premiums to damage this month, investors said.
" hedp na is not so solid this month, most definitely assessing ESPO premiums," a China-based crude trading source claimed.
Rising stocks in China as a result of 3 successive months of robust crude imports saw demand for April packing cargoes soften, noted investors.
Crude oil stocks in the Shandong province had been growing since November, with volumes hitting 129.47 million barrels in mid-February, up 15.5% from the end of November, satellite information from Ursa showed.
While very early April packing cargoes traded at a range of .5-2.7/ b to Dubai, sources noted that this was as a result of details demands by some customers for those certain loading days.
Eventually April packing ESPO premiums boiled down below .5/ b to Dubai, with Russia's Surgut offering six cargoes, each 100,000 mt in dimension to trading residences and oil majors at a costs of around .2-2.4/ b to Dubai, by means of a tender.
A slim EFS likewise added to the cost slide, traders claimed. A narrower EFS spread indicates that Dubai-linked crude grades are valued reasonably greater compared to Brent-linked unrefined grades, making them less competitive because of this, traders included.
The front-month Brent/Dubai Exchange of Futures for Swaps, a key indicator of ICE Brent's costs to Dubai swaps balanced 51 cents/b in February, falling from a January average of .04/ b, Platts information revealed.
"EFS has actually remained narrow whole of February, not helpful for ESPO prices," a Singapore-based crude trader claimed.
Traders expect additional downside pressure for ESPO premiums for the coming months.
"There are still some unsold barrels on the market. Premiums should drop additionally near /b [to Dubai]," the unrefined trader noted.
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