Latest news with #WTI-Midland
Yahoo
4 days ago
- Business
- Yahoo
Demand for US light sweet crude drops as OPEC+ ramps up output
By Stephanie Kelly and Robert Harvey NEW YORK (Reuters) -Rising OPEC+ supplies and new streams of oil coming online globally are increasing options for European and Asian refiners and weighing on export demand for light sweet U.S. crude, contributing to lower prices in the country's main oil-producing regions. The U.S., the world's largest crude producer, is facing increasing competition as the Organization of the Petroleum Exporting Countries and its allies pump more oil in a bid to regain market share and punish members that over-produce. Since April, OPEC+ countries including Saudi Arabia and Russia have made or announced increases totaling 1.37 million barrels per day, or 62% of the 2.2 million bpd they aim to add back to the market. The additional supplies come at a time of broad uncertainty for global oil producers as they assess how volatile trade policies are impacting the world's economic outlook and prepare for a longer-term future in which greener fuels could displace their barrels. For the U.S., lower demand for a significant portion of its crude will likely add to a complicated outlook for producers already digesting on-again, off-again tariffs from President Donald Trump's administration. Companies are considering cutting output and jobs even as Trump urges higher domestic production. U.S. exports fell to an average of 3.8 million bpd in May from an average of 4 million bpd in April, according to an analysis of weekly Energy Information Administration data. Prices have declined for crudes such as WTI-Midland, a key sweet grade from the U.S. shale region. Since early March, its price is off by 45% to a 60-cent premium to U.S. crude futures. Light Louisiana Sweet from the U.S. Gulf Coast has fallen by about 30% to a $2.70 per barrel premium over the same period. "That's a part of OPEC accelerating. Light sweets are weak, broadly speaking," said Jeremy Irwin, global crude lead at Energy Aspects, adding that demand is expected to fall further as European refiners favor medium crudes in the summer months. The U.S. sent 1.4 million bpd of light, sweet crude to Europe in May, versus 1.6 million bpd in April, data from Kpler showed. In May 2024, the U.S. exported 1.7 million bpd of light, sweet crude, which is lighter in density and lower in sulfur content, to Europe. While light crudes are typically easier for refineries to process, many global refineries have invested in upgrading capacity to run heavy-sour grades, which are usually cheaper and still yield sufficient quantities of higher-value fuels. As Asian refiners come out of turnaround season - when plants reduce output for maintenance purposes - and European refiners ramp up fuel production going into summer, demand for medium-sour grades has increased. GLOBAL SUPPLY MEETS UNCERTAIN DEMAND Increased OPEC+ exports will primarily flow into Asia. Lower prices for Murban crude produced in the United Arab Emirates have made it unprofitable to export WTI to Asia, said Richard Price, an oil markets analyst at Energy Aspects. OPEC+ is increasing output more quickly than expected this year to punish allies such as Kazakhstan, which has produced well above its OPEC+ target. "The rise in Kazakh crude production means greater availability of CPC blend crude, which is increasingly competing with WTI into Europe," said Matt Smith, a lead oil analyst at Kpler. CPC Blend is light density crude, similar to WTI-Midland. Additionally, Guyana and Brazil's exports into Europe could increase from the 400,000 bpd they each already send, if European refiners can absorb it, Smith said. Other sweet grades including barrels from Libya and Algeria, and Norway's new Johan Castberg stream, are giving European refiners more choice, Vortexa analyst Rohit Rathod said. Global petroleum consumption is expected to grow by 970,000 bpd in 2025 and 900,000 bpd in 2026, the EIA said, while global crude production is expected to grow by 840,000 bpd in 2025 and 680,000 bpd in 2026. But demand growth currently is mainly fueled by oil products that are best refined from heavier barrels, said Janiv Shah, vice president of commodity markets at Rystad Energy. "As such, we expect increased throughput of available medium sour barrels and some discounting of light sweet grades."
Yahoo
06-03-2025
- Business
- Yahoo
Weak refinery, export demand weakens prices for Midland crude along Texas coast
By Arathy Somasekhar HOUSTON (Reuters) - The price spread between WTI Midland crude in West Texas and Houston has narrowed this year as cold weather hurt Permian production, driving up prices, but weaker refinery and export demand on the U.S. Gulf Coast pressured that market lower. The spread between the two pricing points narrowed to 23 cents in March, the lowest since November 2023. That compared to an average of 50 cents a barrel a year ago, when record crude production at the top U.S. Permian oilfield and strong export demand for WTI Midland crude widened price differentials. WTI Midland crude traded at a $1.08 premium to U.S. crude futures in March, easing from a 11-month high of $1.22 in the previous month, data from pricing agency Argus showed. The jump in prices in February came as 1.8 million barrels in the Permian were cut by the recent cold weather that hit operations, according to estimates from analysts at consultancy Energy Aspects. Meanwhile, Permian-quality crude at the Magellan East Houston (MEH) terminal, the main price assessment point along the Gulf Coast, traded at a $1.31 premium to U.S. crude futures. That compared to a $1.47 premium last year. A 10% tariff by the U.S. government on Canadian crude also pressured the spread as Midwest refiners were seeking WTI-Midland crude to Cushing to replace Canadian light sweet oil, said Energy Aspects analyst Jeremy Irwin. Permian to Cushing pipeline flows are tracking 100,000 barrels per day higher year-over-year for the first quarter, Irwin said. Cushing inventories have been near operational lows in recent months, but climbed to about 25.7 million barrels last week, its highest level in four months. Energy Aspects said it has increased its expectations for flows on the BP 1 pipeline, which runs from Cushing to BP Plc's Whiting refinery in Illinois and the Ozark pipeline, which connects Cushing to refineries in Wood River, Illinois, as inland refiners to pull more WTI Midland barrels given tariffs. WEAK DEMAND ALONG THE COAST Four-week average U.S. refinery utilization stood at 85.6% in the week to February 26, data from the U.S. Energy Information Administration showed, as fuel producers undergo maintenance ahead of summer driving season. Net input of crude oil to refiners on average over 4 weeks to the last week was 15.5 million, 4.2% lower than average 2024 levels. Also capping demand was the final shutdown of LyondellBasell Industries' 263,776 barrel-per-day (bpd) Houston refinery this month. U.S. crude export volumes also eased 9,000 bpd to 3.88 million bpd in February, as spring refinery maintenance in Europe cut flows, and as China implemented a 10% retaliatory tariff on U.S. oil. China accounted for about 5% of U.S. crude exports in 2024. America's excess light-sweet supply is struggling to attract international interest, pressuring MEH to soften to attract international buyers, said Irwin. The narrow price differential between WTI Midland and MEH is expected to be temporary, however, Wood Mackenzie analyst Dylan White said, as refinery maintenance season resolves through spring, and on the back of strong Permian production growth and increased use of available pipeline capacity. Sign in to access your portfolio
Reuters
06-03-2025
- Business
- Reuters
Weak refinery, export demand weakens prices for Midland crude along Texas coast
Summary Companies Cold weather impacts about 1.8 mln barrels of Permian output - analyst Midwest refiners seek Midland crude to cut dependency on Canadian light - analyst U.S., Europe refinery maintenances cut demand at the coast Narrow price differential between WTI Midland and MEH expected to be temporary - analysts to be temporary - analysts HOUSTON, March 6 (Reuters) - The price spread between WTI Midland crude in West Texas and Houston has narrowed this year as cold weather hurt Permian production, driving up prices, but weaker refinery and export demand on the U.S. Gulf Coast pressured that market lower. The spread between the two pricing points narrowed to 23 cents in March, the lowest since November 2023. That compared to an average of 50 cents a barrel a year ago, when record crude production at the top U.S. Permian oilfield and strong export demand for WTI Midland crude widened price differentials. WTI Midland crude traded at a $1.08 premium to U.S. crude futures in March, easing from a 11-month high of $1.22 in the previous month, data from pricing agency Argus showed. The jump in prices in February came as 1.8 million barrels in the Permian were cut by the recent cold weather that hit operations, according to estimates from analysts at consultancy Energy Aspects. Meanwhile, Permian-quality crude at the Magellan East Houston (MEH) terminal, the main price assessment point along the Gulf Coast, traded at a $1.31 premium to U.S. crude futures. That compared to a $1.47 premium last year. A 10% tariff by the U.S. government on Canadian crude also pressured the spread as Midwest refiners were seeking WTI-Midland crude to Cushing to replace Canadian light sweet oil, said Energy Aspects analyst Jeremy Irwin. Permian to Cushing pipeline flows are tracking 100,000 barrels per day higher year-over-year for the first quarter, Irwin said. Cushing inventories have been near operational lows in recent months, but climbed to about 25.7 million barrels last week, its highest level in four months. Energy Aspects said it has increased its expectations for flows on the BP 1 pipeline, which runs from Cushing to BP Plc's (BP.L), opens new tab Whiting refinery in Illinois and the Ozark pipeline, which connects Cushing to refineries in Wood River, Illinois, as inland refiners to pull more WTI Midland barrels given tariffs. WEAK DEMAND ALONG THE COAST Four-week average U.S. refinery utilization stood at 85.6% in the week to February 26, data from the U.S. Energy Information Administration showed, as fuel producers undergo maintenance ahead of summer driving season. Net input of crude oil to refiners on average over 4 weeks to the last week was 15.5 million, 4.2% lower than average 2024 levels. Also capping demand was the final shutdown of LyondellBasell Industries' (LYB.N), opens new tab 263,776 barrel-per-day (bpd) Houston refinery this month. U.S. crude export volumes also eased 9,000 bpd to 3.88 million bpd in February, as spring refinery maintenance in Europe cut flows, and as China implemented a 10% retaliatory tariff on U.S. oil. China accounted for about 5% of U.S. crude exports in 2024. America's excess light-sweet supply is struggling to attract international interest, pressuring MEH to soften to attract international buyers, said Irwin. The narrow price differential between WTI Midland and MEH is expected to be temporary, however, Wood Mackenzie analyst Dylan White said, as refinery maintenance season resolves through spring, and on the back of strong Permian production growth and increased use of available pipeline capacity.
