Sweet-Sour Blowout May Distort Oil Markets This Summer

摘要

At face value, oil market fundamentals look broadly balanced. Extra crude oil supply from Opec-Saudi Arabia, in particular-has largely made up for the loss of Libyan production. And global supply exceeded demand by a comfortable 500,000 barrels per day in March, according to Energy Intelligence estimates. Yet this relaxed picture disguises some significant distortions, with an increasingly tight market for sweet crude and a growing surplus of sour (JFI Feb.28,p1). Since disruptions to Libyan crude exports began in mid-February, differentials between sweet and sour crudes have widened significantly in Europe. Japan's earthquake and nuclear crisis have exacerbated this trend by boosting demand for sweet crude for direct burning by electric power utilities there (JFI Apr.18,p1).The loss of Libyan volumes and increased Japanese demand have both helped propel middle distillate crack spreads to wider levels. The processing of relatively sourer crude, which is generally heavier, typically leads to a shortfall of lighter products and a glut of heavier ones.