Dropping Crude Prices in US Physical Market Lure Buyers in Asia

Crude prices in US physical markets are plunging, awakening interest in American supplies from Asian and European buyers.

(Bloomberg) — Crude prices in US physical markets are plunging, awakening interest in American supplies from Asian and European buyers.

Prices of West Texas Intermediate loading in November for Asian clients have dropped by about $2 per barrel from their 2023 peak in September, according to people with knowledge of the situation, who asked not to be named. Much of the drop came this week, after the Israel-Hamas war spurred Saudi Arabia to reaffirm its support for OPEC+ efforts to keep prices stable, which traders saw as a reassurance that the kingdom would boost output in the event of supply disruption.

Amid the price drop, buyers in Asia have booked at least five supertankers since Wednesday, according to fixture reports and people with knowledge of the situation. That’s the equivalent of about 10 million barrels of oil.

Still, the purchases come amid tight inventories and as US shale producers sell crude that starts loading next month, when refineries in North America and Europe wrap up maintenance and are eager to stock up on supplies to take advantage of wider profit margins for making diesel.

WTI loading in November is being offered at a premium of around $7 per barrel to Middle East’s Dubai prices, down from $9 at the end of last month.
The drop in WTI prices is closing the gap with Abu Dhabi’s Murban oil, priced at a premium of $4.25 a barrel to the Dubai marker, according to pricing agency General Index. Murban is often compared with WTI by Asian buyers.
Prices of domestic light sweet to Europe are currently at a premium of about 50 cents a barrel to ICE Brent prices, from about $2 last week. The prices are for cargoes loading in November.

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