Australian heavy sweet crude remains most expensive in the world
Quantum Commodity Intelligence - Australian heavy sweet crude oil cemented its position as the most valuable in the world Monday, with premiums holding at around two-year highs, underpinned by the buoyant 0.5% sulfur fuel oil market.
A July-loading Pyrenees crude cargo was heard sold at Dated Brent plus around $20/b, similar premiums to the May and June barrels amid a squeeze on ultra-low-sulfur crude and a shortage of distillate blendstocks used to reduce sulfur content in bunker fuel.
Record premiums of more than $30/b to Dated Brent were registered in early 2020 following the introduction of the 0.5% sulfur bunker fuel, as mandated by IMO 2020.
At 19.0 degrees API gravity and around 0.2% sulfur, the Australian heavy sweet grade is in demand for blending into the 0.5% bunker pool, where a shortage of lighter distillate fuels used in blending has seen the low-sulfur bunker grade rocket in recent weeks.
Marine fuel cracks for physical barrels versus Brent soared to near records of almost $30/b Monday, according to Quantum data.
BHP owns a 71.43% operating interest in the Pyrenees field and is partnered by Inpex and Santos, while traders noted that Santos is typically a spot seller via tender.
The Van Gogh grade is expected to attract a similar premium Pyrenees, while Vincent, also a heavy sweet, is likely to trade below Pyrenees due to a recent change in specifications on the grade, making it less suitable for 0.5% fuel blending.
Earlier this month, Australia's National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) informed on Tuesday that it had approved the Pyrenees phase 4 infill drilling programme of BHP Petroleum and Santos.
Premiums for lower-sulfur West African barrels were also seen rocketing, with refiners in Europe looking to cash in on record gasoline and distillate cracks.
Offers for medium sweet Forcados Blend and Escravos were heard at $7.50 over Dated Brent, while Quo Iboe was offered around $6/b over the North Sea benchmark.
