While an ongoing excess of prompt cargoes has kept North Sea crude differentials moving sideways around multi-month lows, traders have remained optimistic for a recovery ahead, with an ongoing mixed structure seen across the two forward months encompassed in the Brent CFD complex similarly suggesting the market has found a floor.
An overhang of WTI Midland cargoes arriving across May and June in recent weeks has been pinpointed as a catalyst for the collapse of differentials of adjacent crudes in the Dated Brent basket, creating a difficult environment for sweet barrels to find homes.
Platts, part of S&P Global Commodity Insights, last assessed differentials for WTI Midland on a CIF Rotterdam basis at a 69.5 cents/b premium to Dated Brent May 14, hovering around a three-month low of a 67-cent/b premium as copious offering activity continues in the Platts Market on Close assessment process.
In fact, MOC sessions in recent weeks have seen some of the highest number of offers for WTI Midland left outstanding in the MOC since its introduction to the Dated Brent basket in 2023, with the highest being nine outstanding offers reached in the April 29 session.
Sources suggested that strong supply was at least partially responsible for the ongoing trend of relatively early public cargo nominations into the Cash BFOE chaining mechanism, with a lack of attractive bids in the over-the-counter market incentivizing the placement of some early-June Midland arrivals into chains.
Despite the looming prompt overhang, sentiment seemed to have taken an upbeat turn with market participants not seeing much further downside from recent lows.
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