Softer Crack Spreads Drag on North Sea Trade

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  • October North Sea crude exports are up 30% on the month to 775,000 b/d, which is 58,000 b/d lower on September 2021.
  • Crude supply is not an issue right now, but the relative weakness in product margins is sending the wrong signals to refiners.
  • The Brent price structure has deflated and is supportive of demand, but high volatility partly discourages forward hedging despite the looming EU embargo.

North Sea trade has slowed in response to lower refining spot demand. The late softening in European refining margins is coinciding with seasonal downstream turnarounds, but it comes at a bad time. With middle distillate stocks still below winter requirements, weaker crack spreads send the wrong supply signal.

Oil Spot Markets, Oil Trade, Oil Supply
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