Med Crude-Urals Hits Fresh 14-Month Low in Med

Russian Urals crude weakened to a fresh 14-month low in the Mediterranean due to a cargo overhang, weak refining margins and uncertainty over whether Russian exports would fall in June as a result of higher runs at home.

"If the June programme comes out short, then prices will stop falling. Otherwise, I see no reason why we should not continue declining," a trader with an oil major said.

In the Platts window, Vitol offered a 140,000-tonne cargo of Urals for early June delivery in the Mediterranean at dated Brent minus $2.50 a barrel, some 60 cents lower than previous price estimates, traders said.

Unipec also offered a Suezmax for the same dates at dated Brent minus $2.35, in a sign of a market glut, traders said. Both could not find buyers.

In the Baltic, Vitol sold a cargo of Urals to Statoil (STO) for early June at dated Brent minus $1.95, in line with previous price estimates, traders said.

In other grades, Eni offered early June CPC at dated Brent plus 25 cents, higher than previous price estimates. BP offered a cargo of Azeri at dated Brent plus $3.05, some 15 cents weaker but found no buyers, traders said.

Russian Urals prices traditionally dip during the March-May period as local refineries are undergoing maintenance work and exports increase. But prices recover during summer months when domestic refineries maximise runs to cover soaring gasoline demand for the driving season.

"It may not look like it now, but the market for Russian sour crude is fast approaching its bull season and we expect this year to follow in a similar vein as last year with Urals (CIF Augusta) striking temporary premiums to Dated Brent," JBC Energy said in a note this week.

"As refiners ramp up runs, availability is tight due to the EU embargo on Iranian crude imports as well as the standstill of the Kirkuk/Ceyhan pipeline, while Russian refiners are consuming more of their own crude domestically," it added.

"There is a growing tendency to underestimate the deficit of Iranian crude in the region... and the seasonal nature of Iranian imports," it said.

Before the embargo, European refiners excluding Turkey typically purchased around 700,000 bpd of Iranian crude over the July-September period, according to JBC.

"Naturally, Med refiners are acutely aware of this and have been trying to secure more June-loading Iraqi Basrah Light barrels with some success," it said.

In Libya, the western El Feel and El Shahara oilfields were still closed, a spokesman for National Corp Oil (NOC) said on Tuesday, more than a week after the government said protests there were over.

NOC spokesman Mohammed El Harari also said firefighters had extinguished a fire at a crude pipeline south of eastern Es Sider port, which is closed due to a blockage by a rebel group.
 

He gave no new production figure. On Monday, NOC had put output at 210,000 barrels a day.

(Reporting by Dmitry Zhdannikov; Editing by David Evans and Susan Thomas)