London (March 10, 2021) – S&P Global Platts (“Platts”), the leading independent provider of information and benchmark prices for the commodities and energy markets, announced…
Mar 10, 2021
Vera Blei, Head of Oil Markets Price Reporting, S&P Global Platts, said: “Platts takes its stewardship of the Dated Brent benchmark and its on-going collaboration with the industry very seriously. Since changes to the complex were announced in February, we received extensive feedback from market participants in support of introducing WTI Midland into the basket but there is not agreement on how it would be fully reflected into the wider Brent complex. We have listened to this feedback and believe the best route forward is to defer changes to the core FOB Dated Brent complex and to keep Dated Brent and all related assessments, including Cash BFOE unchanged on an FOB basis. This allows the opportunity for a widespread consultation with market participants so that we act on constructive suggestions to safeguard the future of the benchmark.”
Platts will continue to focus on incorporating Midland WTI into its existing CIF Dated Brent assessment (PCAKM00) for deliveries from July 2022, as previously announced. This step will bring transparency to the pricing of the existing basket grades combined with WTI Midland crude on a delivered basis, which is the way WTI Midland typically trades when delivered to the market.
Platts will also continue with its plans to form an industry working group to consult on revised terms and conditions for voluntary use to reflect the inclusion of WTI Midland in the Brent complex. This will allow consideration of CIF terms and conditions, as well as any alternatives that will ensure continued connectivity between Dated Brent and Cash BFOE in light of the upcoming incorporation of Midland WTI into the complex.
These efforts are designed to result in core terms and conditions that Platts would reflect in its Brent complex of assessments. This will be subject to further public consultation ahead of being published as a final document.
The full subscriber note can be found here:
Americas: Kathleen Tanzy, +1 917 331 4607, email@example.com
Asia: Melissa Tan, +65-6597-6241, firstname.lastname@example.org
EMEA: Alex Brog, +44 20 7176 7645, email@example.com and Russ Gerry, +44 207 176 3569, firstname.lastname@example.org
At S&P Global Platts, we provide the insights; you make better informed trading and business decisions with confidence. We’re the leading independent provider of information and benchmark prices for the commodities and energy markets. Customers in over 150 countries look to our expertise in news, pricing and analytics to deliver greater transparency and efficiency to markets. S&P Global Platts coverage includes oil and gas, power, petrochemicals, metals, agriculture and shipping.
S&P Global Platts is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies and governments to make decisions with confidence. For more information, visit https://www.spglobal.com/platts/en
Apr 13, 2021
The oil market is starting to face a new set of questions as it emerges from the pandemic and as energy transition momentum builds.
S&P Global Platts Associate Director Paul Hickin spoke with the International Energy Agency‘s Head of Oil Markets Division Toril Bosoni about the outlook for oil demand, the role of OPEC+, US shale and China in the new reality and the challenges for energy security.
Mar 26, 2021
Abu Dhabi National Oil Co. and the Intercontinental Exchange are launching a crude futures contract March 29, as the UAE seeks to transform the Middle East trading landscape.
The contract, underpinned by Murban crude, may expand ADNOC’s market influence and strengthen the port of Fujairah’s status as a key storage, refining and export hub.
Apr 28, 2021
May 05, 2021
Dec 07, 2020
Connecting the upstream and trading communities As the oil community comes to terms with the past year, the industry faces a long and bumpy road…
Jun 15, 2021
As the oil community comes to terms with the past year, the industry faces a long and bumpy road ahead. What lies in store for the markets as the world emerges from a severe economic downturn as a result of the global pandemic, how do we expect the markets to rebound, and where does the energy transition fit into all of this?
Join us to better understand how upstream markets are adapting in this time of great uncertainty.
– Understand what the key market drivers are for 2021 – explore the geopolitical and macroeconomic landscape; Biden’s first 5 months in presidency, latest OPEC negotiations, and how economic recovery is looking globally
– Explore the current supply landscape; including how market dynamics have shifted amongst all of the chaos
– Gain insights onto the latest demand recovery outlook – including how the downstream industry has coped and adapted in light of recent events.
– Hear perspectives on what might be in store for the industry in the long term, including financing the industry in light of ESG and capex reductions.
Energy security concerns are bubbling beneath the surface as the global oil market seems to be entering into the early stages of recovery from the…
Apr 22, 2021
Energy security concerns are bubbling beneath the surface as the global oil market seems to be entering into the early stages of recovery from the pandemic.
While OPEC+ can provide the necessary crude as demand recovers in the near term, there may be a lack of firepower from the rest of the oil-producing fraternity further down the line.
But the recent rise in oil prices could be just what the world needs.
Dated Brent, the global physical oil benchmark, has recently been hovering in the low-to-mid $60s/b, having risen more than 50% since demand-led optimism over the COVID-19 vaccine rollout back in November. And oil prices could shift higher again once the market shakes off the latest bout of coronavirus jitters.
S&P Global Platts Analytics predicts oil prices will climb above $70/b around mid-year as improved supply-and-demand fundamentals starting in May lead to substantial stock draws through to August.
While large oil-consuming countries such as India may crank up the volume over their displeasure and many OPEC+ countries may be eager to ditch compliance to their production-cut deal or push to pump more, both consumers and producers alike may want to consider the benefits should oil prices stay in their arguable sweet spot.
While the warning signs over a supply crunch in the coming years are well documented, they have been overshadowed by the pressing needs of consumer economies ravaged by COVID-19 and producer countries crippled by low oil prices. But these very low oil prices along with the energy transition push have accelerated supply concerns.
Many analysts have tried to put huge numbers on the likely shortfall in spending on upstream oil projects in the coming years, signaling that even with higher prices driving investment in new projects, there is a long way to go before this spending starts to plug the gap.
Saying that, there is a strong correlation between the average oil price and sanctioned non-OPEC oil projects in recent years. Indeed, there is already evidence of a pickup in approved oil investments, with some deferred projects in 2020 getting their due.
US oil production, noted over recent years for its stellar shale growth and ability to bring on crude at short notice, is unlikely to return to its pre-pandemic peak of 13 million b/d until the middle of the decade, according to Platts Analytics.
But there are glimmers of hope.
While many US oil companies are still in a precarious financial position, low well breakevens and positive cash flow this year are stimulating shale output at current prices.
“Sustained oil prices above $60/b could allow oil companies to respect the pledges that they made in their latest investor strategies to maintain capital discipline, return capital to investors, reducing their debt, but at the same time increasing their investment,” Toril Bosoni, the International Energy Agency’s head of oil markets division, said in a recent interview with Platts.
In the meantime, as OPEC+ starts to raise output to meet growing oil demand, the amount of spare production capacity in the system begins to dwindle.
Platts Analytics sees the amount of crude that can be sustainably produced at short notice halving by September to less than 4 million b/d, with most of that left in the hands of Saudi Arabia.
While global spare capacity has over the past decade averaged close to 2 million b/d, according to Platts Analytics calculations, attacks on Saudi Arabia oil facilities become a bigger risk factor when oil buffers are reduced.
OPEC+ may finally take a bigger share of the market given weaker competition and increased demand, but an overreliance on the oil-producing pact with less spare capacity has its own risks.
Middle East geopolitics are notoriously unpredictable, with recent history marked by Iran sanctions, Libya’s internal political dispute, disruptions at pivotal waterways such as the Strait of Hormuz and Bab el-Mandeb, and the attack on Saudi Arabia’s Abqaiq oil infrastructure.
While the container ship that got stuck in the Suez Canal rattled supply chains more than oil markets, it should serve as a reminder of how vulnerable chokepoints are for tankers to deliver crude and key oil products, especially when oil balances are thinner.
Energy security comes at a price for both the consumer and the producer, as the former looks to diversify crude streams and the latter tries to ensure better returns. Guaranteed stable supply matched with regular demand is in the interest of all parties. Getting it wrong could prove costly.
In this week’s Market Movers Americas, presented by Sergio Alvarado: – COVID fight putting a lid on oil prices – Federal lease sales ban to…
Apr 26, 2021
In this week’s Market Movers Americas, presented by Sergio Alvarado:
– COVID fight putting a lid on oil prices
– Federal lease sales ban to last through June
– Sunk costs support trans-Atlantic Aframax freight
– Global benzene prices surge to record highs
– Agricultural markets testing higher price levels
The Asia Pacific Petroleum Conference, APPEC, is back for its 37th year! The 37th Asia Pacific Petroleum Conference (APPEC 2021) will be taking place from…
Sep 27, 2021
The 37th Asia Pacific Petroleum Conference (APPEC 2021) will be taking place from September 27-29. The event will feature hybrid conference elements to allow those near and far to participate in the APPEC experience, whether onsite or online.
It is our pleasure to be hosting guests physically in Singapore and virtually for those around the world!
This year the event will focus on three key themes for the industry:
Where are we in the post-pandemic cycle?
How will the new energy era evolve?
Energy Transition is at the forefront in the market, but how will the transformation progress and develop?
Key sessions will focus on macroeconomic and geopolitics issues, oil across the barrel and through the supply chain, shipping, technology, and finance.
Every APPEC delegate will be able to customize and tailor their experience with our three streams:
– APPEC in-person (Singapore)
– APPEC online
– APPEC on demand
Now a year removed from the April 20, 2020 price collapse of WTI futures into deeply negative territory, the center of gravity for physical crude…
Apr 20, 2021
Now a year removed from the April 20, 2020 price collapse of WTI futures into deeply negative territory, the center of gravity for physical crude pricing in the US continues to shift to the Gulf Coast.
Last spring, the crude market was reeling from a near-overnight destruction of refining demand. With US new coronavirus cases rising from virtually zero in mid-March, to over 30,000 per day by mid-April, demand for transport fuels fell precipitously, prompting refiners to cut runs. Producers were slower to act. With refining demand in April 2020 down over 3 million b/d, production had barely budged, falling less than 1 million b/d to 12 million b/d.
The result of this temporary mismatch in supply and demand was a surge in crude inventory, particularly at the physical home of the NYMEX WTI futures contract, Cushing, Oklahoma. The hub’s over 75 million b of storage was quickly filling as the May delivery contract approached expiration on April 21, prompting anyone long without committed storage to exit positions. On April 20, 2020, the May contract settled at -$37.63/b, a previously unthinkable move into negative pricing.
The sub-zero futures settlement value sent shockwaves through the industry, with financial implications for any pricing linked to the contract. The event also demonstrated differing market dynamics of the inland pipeline market versus the Gulf Coast. While the assessment for physical crude in Cushing dropped below zero, S&P Global Platts assessed WTI Midland at positive values on the Gulf Coast based on pricing data collected from the market.
Platts launched assessments for US crude loading at the Gulf Coast in 2016 and refined the methodology over the years. That work accelerated after the events of April 20, 2020.
With the events of April 20 highlighting the issues around using Cushing, Oklahoma as a benchmark location, the industry called out for crude pricing alternatives that better reflect the realities of US crude supply, demand, and trading. Chaired by Harold Hamm of Continental Resources, the newly formed American GulfCoast Select Best Practices Task Force Association laid out some specific parameters for a new benchmark including that it be based on the Gulf Coast, providing access to the water and limitless storage potential.
Drawing from its experience with the Dated Brent and Dubai-Oman waterborne cargo benchmarks, Platts launched Platts AGS. This Free On Board (FOB) assessment reflects a 700,000-barrel cargo loading WTI Midland crude at terminals across the US Gulf Coast, and Platts has continued working closely with market participants to tackle methodology challenges such as differing cargo sizes and crude quality.
Since the lifting of export restrictions some five years ago, US crude grades have become firmly established in the refining slates of Asian and European refiners and on the back of these regular export flows, transparency has increased notably in US Gulf Coast export pricing. Platts’ Houston-based crude pricing team has published over 60 FOB USGC price indications, known as “heards,” so far in 2021.
In the Platts Market on Close (MOC) assessment process, WTI Midland Delivered At Place (DAP) Rotterdam sees transparently published bids, offers and trades which are closely analyzed by traders at the US Gulf Coast. Since mid-February, there have been 14 offers published in the Platts MOC process for WTI Midland delivered to Rotterdam, all of which were priced at a differential to Dated Brent.
One of the key factors behind the growth in transparency of US crude export pricing has been the progress in defining WTI Midland quality specifications that are reflected in all Platts assessments around the world.
And while the US crude export market continues to mature, the work on assessment specifications continues, including the recent launch of a consultation on typical terms for terminal and vessel nomination in Gulf Coast crude exports.
Given its close link to Dated Brent, WTI Midland cargo assessments have usually tracked global pricing closely.
With crude demand continuing its slow upward trajectory, and amid supply-side discipline, crude prices have stabilized in the $60/b area, which should sustain the US production recovery, spurring more exports. US production breakeven in the lower 48 states ranges from about $34/b in the Permian Delaware to just under $50/b in the SCOOP, according to Platts Analytics.
With Platts Analytics forecasting NYMEX WTI above $55/b through the 2020s, prices are expected to remain at a level that supports increased drilling and production in the US, particularly in the low-cost Permian Basin. Following its February 2021 trough at 10.1 million b/d, US crude production will reach 12 million b/d by the end of 2022, according to Platts Analytics.
That recovery in production should have a knock-on effect on crude flows abroad. Platts Analytics estimates US crude export volumes (excluding Canada) will trough this summer at about 2 million b/d before climbing to 3 million b/d and 4 million b/d by the end of 2022 and 2024, respectively.
With the temporary decline in US crude exports and startup of pipeline capacity to Corpus Christi, the port has steadily increased its share of US crude exports. In mid-2019, exports from Houston of about 900,000 b/d were about double Corpus Christi, according to Kpler data. As of last month, that relationship had reversed with Corpus Christi export volumes at about 1.4 million b/d, more than double the 600,000 b/d departing from Houston.
Platts AGS reflects the FOB value of a 700,000 barrel cargo loading at any of the commonly used to Texas ports—Houston, Nederland, and Corpus Christi. The assessment’s normalization for cargo size and strict parameters around crude quality assure that bids, offers, and trades across these locations are fungible.
As the US market observes increasing transparency in WTI Midland price assessments on the Gulf Coast, the global industry is also assessing the inclusion of the grade in the Brent complex. Platts announced in March 2021 that WTI Midland would be included in the CIF Dated Brent assessment beginning July 2022 and that further consultations will be held on the evolution of the core Dated Brent and Cash BFOE benchmarks, including the potential inclusion of WTI Midland.
With the crude’s similar gravity and sulfur characteristics to the existing North Sea grades of Brent-Ninian Blend, Forties, Oseberg, Ekofisk and Troll, WTI Midland has become a mainstay of Northwest Europe crude supply. About 700,000 b/d of WTI Midland reached Northwest Europe in 2020.
While the decision of whether to include WTI Midland in the wider Brent complex and the mechanism to do so remain a work in progress, the prevalence of the grade in this market demonstrates the importance of Platts AGS. The assessment provides a critical value along the supply chain from the Permian Basin to global demand centers.