Urals differentials versus the Dated Brent market jumped in both the Mediterranean and Northwest Europe in European trading Tuesday after the full provisional December loading program for the Black Sea port of Novorossiisk proved to be the shortest in more than four years.
On Monday, Platts assessed Baltic Sea Aframax Urals cargoes, basis CIF Rotterdam, at a discount of $3/barrel to the Mediterranean Dated Strip, up 35 cents/b from the 13-28 day forward Dated Brent curve since Friday.
Similarly, Black Sea Aframax Urals cargoes, basis CIF Augusta, were also assessed sharply higher, up 26.5 cents/b from Friday.
Traders said differentials in both markets had risen over the last week -- CIF Rotterdam cargoes have climbed 70 cents/b in a week, while CIF Augusta cargoes have jumped 55 cents/b -- as mounting loading delays at Novorossiisk and delivery delays in the Black Sea have created a temporary gap in crude supply in the prompt market.
"It is a bit of a pain, because as the Turkish Strait delays have been increasing, we're looking at basically December 20 arrivals," a trading source said, adding that any lingering overhang from the November loading program in the Baltic Sea cleared out rapidly.
Traders said the particularly sharp climb in differentials Monday was driven by the release of the full provisional December loading program for Novorossiisk, which was the shortest in at least four years.
Exports out of the Black Sea terminal in December are currently set to total 1.7 million mt, with average daily loadings of 396,484 b/d. But 240,000 mt worth of Suezmax volume in the December schedule is carried over from the November program.
Fresh Urals exports from Novorossiisk in December are only set to average 331,181 b/d.
"People are expecting the Med to go much, much stronger," a crude trader said, adding that Urals demand in the region in the early part of December is likely to be met predominately by arbitrage flow from Northwest Europe. "But we need the NWE schedule to know how much [stronger.]"
In the Platts Market on Close assessment process Monday, a Litasco bid for an 80,000 mt Urals cargo, ex-Novorossiisk, loading December 14-18 CIF basis Augusta, was left outstanding at the 16:30 London close at Dated Brent minus $1.95/barrel.