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In change for oil market, new US crude in Brent index lacks loading plan

Published 04/28/2023, 07:57 AM
Updated 04/28/2023, 08:01 AM
© Reuters. FILE PHOTO: A seagoing barge is loaded with crude oil from the Eagle Ford Shale formation at the newly expanded crude dock at the Port of Corpus Christi, Texas, April 10, 2014.  REUTERS/Darren Abate
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By Alex Lawler

LONDON (Reuters) - The U.S. crude oil being added to the global Brent benchmark will lack the list of cargoes scheduled to load that could help set the price, a change for an industry that is accustomed to using such programmes to assess supplies.

Oil-index publisher S&P Global (NYSE:SPGI) Platts is adding U.S. WTI Midland crude to its dated Brent oil price assessment for June deliveries, which is now in focus as the market trades roughly a month ahead.

Dated Brent is part of the wider Brent complex including physical cargoes, swaps and futures that is used to price millions of barrels of oil each day. Until now, it has been based on five British and Norwegian North Sea crudes.

The companies that run the North Sea crude streams, known as the operator, issue planned cargo loading lists which the industry monitors as an indication of supply. June programmes for the five North Sea crudes were issued this week.

However, Platts told customers in September that U.S. Gulf Coast terminals may not be able to provide month-ahead loading schedules. It said terminals should make clear their typical monthly allotment of slots for potential cargoes, and inform the market promptly of any planned maintenance or major disruptions.

The company told Reuters on Thursday it didn't see any problems around this given that the market has been preparing for the changes for months and participants had told Platts they were comfortable with the process.

"We see no reason for issues," said Joel Hanley, global director, crude and fuel oil, at S&P Global Commodity Insights.

"With the increasing real-time tools in ship tracking, supply chains and flow data and the transparency that price assessments bring, we believe the marketplace has more information about supplies and flows than it ever has before."

Oil traders said there is no WTI Midland programme because the U.S. crude does not have a single operator and several terminals can supply cargoes. Platts will accept 11 U.S. Gulf Coast terminals as supply points for WTI Midland.

Trading veterans Adi Imsirovic and Kurt Chapman wrote last month that "generally, U.S. Gulf terminals do not have a right to publish loading dates" and can only do so if instructed by the cargo owners.

A North Sea trader said the lack of a WTI Midland loading programme could make trading more difficult although he expected some information on loading dates to become available.

© Reuters. FILE PHOTO: A seagoing barge is loaded with crude oil from the Eagle Ford Shale formation at the newly expanded crude dock at the Port of Corpus Christi, Texas, April 10, 2014.  REUTERS/Darren Abate

Potential volumes of WTI Midland coming to Europe are large according to tanker-tracking data. Shipments to Europe hit 1.25 million barrels per day in March, according to Kpler, greater than the other five dated Brent grades combined.

Thomson Reuters (NYSE:TRI) competes with S&P Global Platts in providing news and data about the oil market.

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