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Ivanhoe Energy Inc. Message Board

  • mitpanmitpan mitpanmitpan Oct 3, 2013 11:56 AM Flag

    Sweet-sour crude dislocation felt in products markets

    Canadian heavy oil can get squeezed out too...great opportunity for paritial upgading -- HTL -- to keep heavy oil competitive versus US Bakken crude.

    Sweet-sour crude dislocation felt in products markets
    October 3, 2013: 3:33pm IST
    By Claire Milhench
    LONDON (Reuters) - The U.S. shale oil boom has meant a bumper pay day for U.S. refiners, but its light, sweet composition is leading to a shortage of heavy material, distorting product prices around the globe, refiners and consultants say.
    Speaking at a the Oil & Money conference in London on Wednesday, Dario Scaffardi, general manager of Saras Group, an independent refiner, said there was a shortage of heavy crude in the Mediterranean basin, even as it was being priced out of the United States by cheap light, sweet Bakken crude.
    "There was a lot of hope around Iraq, but production is short of where we were expecting it to be. Sweet and sour differentials are almost at parity - it's ridiculous," he said.
    In July, Russian Urals, a sour crude, rocketed to all-time highs of $1.05 over dated Brent after Iraqi oil flows via the Turkish port of Ceyhan were suspended and Russia diverted flows away from Europe to China.
    The market remained tight all summer, with a lack of alternative light, sweet crudes due to North Sea maintenance and protests in Libya that slashed crude exports.
    "We can switch between crudes within reason ... but it will be a huge problem for the future," Scaffardi warned. "It will be the key issue for refining economics. We are seeing fuel oil valued at 63-64 percent of the value of diesel - this is an historical high."
    High feedstock costs have clobbered the margins of Mediterranean refiners, who made an average loss of 15 cents a barrel in September according to Reuters data. Refiners in northwest Europe made a small profit of 27 cents a barrel.

    Sentiment: Strong Buy

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