OIL: US Crude Heading to Europe in June Fell to Lowest Since Jul 2022

U.S. crude shipments heading to Europe fell to the lowest since July 2022 at 1.45mbpd in June with European buyers sourcing cheaper regional and West African oil, according to Reuters citing Kpler data.

• Most of the U.S. exports to Europe were WTI Midland crude after the grade's inclusion in the Dated Brent benchmark in 2023.
• Shipments declined 14% from May and fell 27% from June 2023. Total U.S. crude exports to all destinations were down to 3.94mbpd in June 4.21mbpd in May.
• The WTI discount to Brent narrowed in May, when June-loading cargoes would have traded, to reduce the profitability of shipping U.S. crude to Europe. The WTI-Brent spread was the narrowest since October at- $3.95/bbl on May 30.
• The WTI-Brent spread typically needs to average -$5/bbl to -$6/bbl for transatlantic arbitrages to be profitable when accounting for freight costs, said Gus Vasquez at Argus.
• An overhang of supply led to cheaper West African grades in May with Nigeria previously struggling to offload cargoes for May loading.
• Exports from the U.S. to Europe are likely to see a recovery in July and August after Europe markets tightened. Stronger Dated Brent has also coincided with weakening crude prices in Asia.

Source: Reuters