Argus Americas Crude

Copyright © 2020 Argus Media group

Argus Americas Crude

Issue 20-126 | Wednesday 1 July 2020

Overview

in the news

Key prices

Crude market prices and analysis

contentsWTI, Gulf coast, midcontinent, waterborne 2-5Latin America 6Canada 7CME Nymex and Ice 7Americas crude pipeline deals 9News 11

All-day weighted average assessments $/blDiff to WTI Diff to LLS price ±

LLS St James +1.30 41.12 +0.45WTI Cushing -1.30 39.82 +0.55WTI Midland +0.04 -1.26 39.86 +0.64WTI Houston +0.91 -0.39 40.73 +0.52Mars Clovelly +1.05 -0.25 40.87 +0.46WCS Hardisty na na ncWCS Cushing -2.25 -3.39 37.73 +0.59WCS Houston -1.63 -2.77 38.35 +0.46

Forward curve: Locational spreads $/bl

wti/Brent 4:30pm London

wti/Brent 1:30pm

houston

LLS/Brent 1:30pm

houston

Sep -2.14 -2.11 -0.91Oct -2.07 -2.02 -0.84Nov -2.06 -2.01 -0.77

1:30pm Houston LLS/WTI Mars/wti Mars/LLS

Aug +1.30 +1.10 -0.20Sep +1.35 +1.00 -0.35Oct +1.38 +0.94 -0.44

Forward curve: Time spreads $/bl1:30pm Houston ice Brent cMe wti LLS Mars

Sep/Oct -0.08 -0.17 -0.20 -0.11Oct/Nov -0.13 -0.14 -0.17 +0.01Nov/Dec -0.16 -0.11 -0.15 0.00

Forward curve: Outright prices $/bl1:30pm Houston LLS wti Midland Mars

Aug 41.12 39.92 40.92Sep 41.27 40.02 40.92Oct 41.47 40.22 41.03

� WTI crude futures rose as the US reported a large draw in domestic crude stockpiles. WTI Nymex August crude futures increased by 55¢/bl to settle at $39.82/bl. Ice September Brent rose by 76¢/bl to $42.03/bl. The September Brent-Sep-tember WTI spread was $2.11/bl.

� Recent sour crude support against light sweet grades at the US Gulf coast is now appearing in the relationship between the Argus Sour Crude Index (ASCI) and the Argus AGS Marker, a new Midland-quality coastal crude assessment launched at the beginning of the July trade month.

� WTI fob Houston narrowed by 35¢/bl to October Ice Brent this session to an assessed range of possible trade at discounts between $1.55/bl and $1.15/bl, while Bakken fob Beaumont widened by nearly 10¢/bl to discounts circling $1.60/bl.

� Offers were due this session on Dominican Republic's Refi-domsa tender to buy 500,000 bl of light sweet crude for 19-20 July delivery to the port of Punta Palenque.

infrastructure � Phillips 66 Wood River reports flaring � Phillips 66 Ponca City started FCC last week

Available on the Argus Publications App

AnnOunceMent

new assessment for wti at the us Gulf coastArgus American GulfCoast Select (PA0030327) is a new price assessment reflecting standard Midland-quality WTI at the US Gulf coast that is now available in this report. Visit https://www.argusmedia.com/en/methodology/key-prices/argus-ags for more information.

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Copyright © 2020 Argus Media group Page 2 of 17

Issue 20-126 | Wednesday 1 July 2020Argus Americas Crude

WTI $/bl

Timing Low High WTI formula basis price

WTI formula basis MTD

Roll to next month

WTI Cushing Aug 39.80 39.84 39.82 39.32 0.10WTI Cushing Sep 39.90 39.94 39.92 0.17WTI Cushing Oct 40.07 40.11 0.14WTI Cushing Nov 40.21 40.25

Timing PriceCMA Nymex Aug 39.98CMA Nymex Sep 40.13CMA Nymex Oct 40.27CMA Nymex Nov 40.37

Timing Basis Diff low Diff highDiff

weighted average

Diff MTD weighted

averageLow High Weighted

average

MTD Weighted

AverageArgus AGS Marker Aug 40.42 40.57 40.48 39.97Argus AGS Aug Aug WTI +0.60 +0.75 +0.66 +0.67 40.42 40.57 40.48WTI Houston Aug Aug WTI +0.85 +1.00 +0.91 +0.93 40.67 40.82 40.73WTI Houston Sep Sep WTI +0.90 +1.00 +0.95 +0.93 40.82 40.92 40.87WTI Midland Aug Aug WTI -0.10 +0.20 +0.04 +0.03 39.72 40.02 39.86WTI Midland Sep Sep WTI 0.00 +0.10 +0.05 +0.06 39.92 40.02 39.97WTI Midland Enterprise Aug Aug WTI -0.10 +0.20 +0.04 +0.03 39.72 40.02 39.86WTI diff to CMA Nymex Aug CMA -0.11 -0.06 -0.09 -0.15WTI postings-plus Aug Postings +3.27 +3.32 +3.29 +3.23

Argus documentation links:

Argus Americas Crude Methodology and Specification Guide

Argus Global Compliance Policy

Argus Media Editorial Code of Conduct

Midcontinent $/bl


weighted average

Diff MTD weighted


average

Bakken Clearbrook Aug CMA Nym -1.75 -1.25 38.23 38.73Bakken Cushing Aug Aug WTI +0.30 +0.50 +0.35 +0.42 40.12 40.32 40.17White Cliffs Aug Aug WTI -1.10 -0.65 -0.88 -1.07 38.72 39.17 38.94Niobrara Aug Aug WTI +0.65 +0.85 +0.75 +0.65 40.47 40.67 40.57WCS Cushing Aug CMA Nym -2.50 -2.00 -2.25 -2.47 37.48 37.98 37.73

Texas $/bl


weighted average

Diff MTD weighted


average

WTL Midland Aug Aug WTI -0.41 -0.36 -0.39 -0.45 39.41 39.46 39.43Bakken Beaumont-Ned-erland Aug CMA Nymex + Argus

WTI diff to CMA +0.70 +0.80 +0.75 +0.71 40.59 40.69 40.64

WTS Aug Aug WTI -0.21 -0.11 -0.14 -0.36 39.61 39.71 39.68WTS Sep Sep WTI -0.15 -0.10 -0.13 -0.20 39.77 39.82 39.79Southern Green Canyon Aug Aug WTI -0.20 +0.20 0.00 +0.12 39.62 40.02 39.82WCS Houston Aug CMA Nym -2.00 -1.25 -1.63 -1.68 37.98 38.73 38.35

Louisiana $/bl


weighted average

Diff MTD weighted


average

LLS Aug Aug WTI +1.25 +1.35 +1.30 +1.33 41.07 41.17 41.12LLS Sep Sep WTI +1.30 +1.40 +1.35 +1.32 41.22 41.32 41.27HLS Aug Aug WTI +1.10 +1.30 +1.20 +1.13 40.92 41.12 41.02Thunder Horse Aug Aug WTI +1.00 +1.10 +1.04 +1.11 40.82 40.92 40.86Bonito Aug Aug WTI -0.15 +0.15 0.00 +0.11 39.67 39.97 39.82Poseidon Aug Aug WTI -0.20 +0.05 -0.08 +0.10 39.62 39.87 39.74Mars Aug Aug WTI +1.00 +1.10 +1.05 +1.16 40.82 40.92 40.87Mars Sep Sep WTI +0.95 +1.00 +0.98 +1.12 40.87 40.92 40.90LOOP Sour Aug Aug WTI +0.65 +0.90 +0.78 +0.88 40.47 40.72 40.60

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Assessment rationaleThe minimum volume was met and volume-weighted average calculated according to the methodology for LLS, Mars, WTI Diff to CMA Nymex, WTI Houston, WTI Midland Enterprise, WTI Midland, WTL Midland and WTS.The Bakken Clearbrook assessment was left unchanged from the prior day with no new information. No Poseidon trades were reported. The grade was assessed at the midpoint of bids and offers.No SGC trades were reported. The SGC low value was assessed using the bid heard against Mars applied to the lowest Mars trade reported, and the SGC high value was the offered level heard against WTI Aug. SGC was assessed at the midpoint of that range. WCS Cushing was assessed at the midpoint of possible trade, with the offer level reflected at the high end and the low end unchanged on no fresh bid discussion.WCS Houston was assessed at the midpoint of bids and offers.

Recent sour crude support against light sweet grades at the US Gulf coast is now appearing in the relationship between the Argus Sour Crude Index (ASCI) and the Argus AGS Marker, a new Midland-quality coastal crude assessment launched at the beginning of the July trade month.

ASCI has been at a premium to the Argus AGS Marker for three consecutive trade sessions. The ASCI premium was es-tablished at roughly 40¢/bl on Wednesday, with the gap widen-ing by about 25¢/bl.

For its part, the Argus AGS Marker firmed by 58¢/bl to $40.48/bl this session, reflecting a 25¢/bl discount to the WTI Houston pipeline index at effective premiums to the Nymex light sweet crude futures contract between 60¢/bl and 75¢/bl.

Nine August WTI Houston deals totaling 18,000 b/d were reported for inclusion in the new index, changing hands at premiums to the US light sweet crude benchmark at Cushing, Oklahoma, between 85¢/bl and $1/bl on Wednesday. Another 1,000 bl of WTI at the Echo terminal sold in the financial, but physically deliverable, market this session at an outright price of $40.25/bl, which was just 36¢/bl stronger than Nymex WTI at the time of the transaction.

Further inland, August WTI Midland was up by about 10¢/bl against Cushing, flipping back to a premium of about 5¢/bl on Wednesday.

In Louisiana, August Mars was down by about 10¢/bl against Cushing, falling to a $1.05/bl premium. Prompt Mars was at roughly a 15¢/bl premium to prompt WTI Houston, although

US GUlf CoASt And MidContinent

Argus successfully completes annual iosco assurance review Argus has completed the eighth external assurance review of its price benchmarks covering crude oil, products, LPG, petro-chemicals, biofuels, thermal coal, coking coal, iron ore, steel, natural gas and biomass benchmarks. The review was carried out by professional services firm PwC. Annual independent, external reviews of oil benchmarks are required by international regulatory group Iosco’s Principles for Oil Price Reporting Agencies, and Iosco encourages extension of the reviews to non-oil benchmarks.

For more information and to download the review visit our website https://www.argusmedia.com/en/about-us/gover-nance-compliance

AnnoUnCeMent

the gap closed by about 5¢/bl.August LLS was also down by 10¢/bl against Cushing, falling

to a $1.30/bl premium. The LLS premium versus Mars was at 25¢/bl, roughly unchanged from Tuesday.

The US Energy Information Administration (EIA) reported that US crude inventories fell by 7.2mn bl to 533.5mn bl last week. The total fell from a record high in the previous week and is about 15pc above the five-year average for this time of year.



US waterborne

Dirty freight rates $/t

US Gulf coast waterborne $/bltiming basis Diff low/high Low/High

WTI fob Houston Prompt Aug CMA Nymex +0.58/+0.98 40.56-40.96

Prompt Aug WTI Houston -0.17/+0.23

Prompt Oct Ice -1.55/-1.15

Bakken fob Beau-mont/Nederland Prompt Aug CMA Nymex +0.38/+0.73 40.36-40.71

Prompt Aug WTI Houston -0.37/-0.02

Prompt Oct Ice -1.75/-1.40

anticipated US crude export cargoes — 15-45 days forward

Tanker nameapproximate volume '000

blestimated grade Load window Load port Chartered destination eta

Azure Nova 2,000 WTI or Mars 12-31 Jul tbd China tbd

Xin Hui Yang 2,000 Mars 27 Jul LOOP China 14 Sep

San Jacinto 1,000 WTI 6-31 Jul Houston, Texas Singapore tbd

Eagle Versailles 2,000 WTI 25 Jul tbd China 12 Sep

Sonangol Kalandula 1,000 WTI 19 Jul Houston, Texas Europe or China tbd

Mikela P 1,000 WTI or Bakken 1-31 Jul tbd Europe tbd

Ninawa 2,000 WTI 26 Jul Ingleside, Texas Asia-Pacific tbd

Nordic Cygnus 1,000 WTI or Mars 20 Jul tbd Singapore 30 Aug

Houston Voyager 2,000 WTI or Mars 1-31 Jul Galveston lightering China tbd

US Gulf coast prices vs global benchmarks $/bltiming basis Price Differential

WTI Houston Sep Sep Dubai swaps* 41.21 -0.27

Aug Nov Ice Brent -1.51

Aug Nov Dubai -0.75

WTI Midland Sep Sep Dubai swaps* 40.31 -1.17


Aug Nov Dubai -1.62

LLS Sep Sep Dubai swaps* 41.61 +0.13


Aug Nov Dubai -0.36

Mars Sep Sep Dubai swaps* 41.39 -0.09


Aug Nov Dubai -0.61

Bakken Beaumont/Nederland Aug Nov Ice Brent -1.60

Aug Nov Dubai -0.84

USGC-China

270,000t 20.37

130,000t 27.69

Argus uses today’s US pipeline outright prices at Nymex settlement to calculate spreads to today’s Ice Brent settlement and Argus Dubai prices three months forward, to account for travel time from the US to Asia-Pacific.*Outright prices are calculated by applying the previous day’s US pipeline dif-ferentials to today’s Singapore Nymex WTI 4.30pm timestamp, to then calculate spreads to Dubai swaps at that timestamp.

USGC/Carib-Singapore

130,000t 22.69

USGC-east coast Canada

70,000t 10.30 USGC-Europe

70,000t 14.29

Waterborne WTI rallied while Bakken fob Beaumont fell as fresh data released this session indicates a draw in domestic supply and increased refinery runs at the US Gulf coast.

WTI fob Houston narrowed by 35¢/bl to October Ice Brent this session to an assessed range of possible trade at discounts between $1.55/bl and $1.15/bl, while Bakken fob Beaumont widened by nearly 10¢/bl to a roughly $1.60/bl discount to the international benchmark at the same time.

The Argus WTI Houston pipeline index was nearly flat this session relative to the basis at a 91¢/bl volume-weighted average premium to the US light sweet benchmark at Cushing, Oklahoma.

Lingering stocks at the US Gulf coast ebbed by 1.31pc, or more than 4mn bl, to 303.97mn bl in the week ended 26 June, according to the latest available statistics from the US Energy

Information Administration (EIA) published this session. Refinery runs in the US Gulf coast region increased by more than 2pc, or 169,000 b/d, to 7.65mn b/d at the same time. Regional refinery utilization rates rose from 77pc to 78.3pc.

Freight rate $ lumpsumRoute Daily worldscale

USGC Aframax reverse lightering 225,000



US west coast pipeline, 30 Jun $/blBasis Diff to Ice Brent Outright

Light postings avg Aug +0.87 42.02

Heavy postings avg Aug -3.80 37.35

US west coast waterborne $/blTiming Basis Diff low/high Low/High

ANS del Aug CMA Nym +3.58/+3.68 43.56-43.66

Aug CMA Ice +1.45/+1.55

ANS del concurrent Aug Aug WTI +3.58/+3.68 43.40-43.50

ANS del USWC monthly volume-weighted average $/blBasis Diff

May Ice CMA -1.24

Jun Ice CMA -11.92

Jul Ice CMA -3.30

Aug MTD Ice CMA +1.30

This could indicate some alleviation of recent supply pressure at the US Gulf coast and lend support to waterborne prices.

Crude futures also drew support this session from a 1pc fall in total US crude stocks to 533.53mn bl in the week ended 26 June, from a record high 540.72mn bl set in the previous week.

US production was flat last week at 11mn b/d but may increase as domestic producers begin to restart previously shut-in wells this month.

US independent ConocoPhillips plans to restart some previ-ously curtailed production in the continental US and Alaska with the expectation of improving oil demand, according to a company press release last session.

Separately, offers were due this session for Dominican Repub-lican refiner Refidomsa’s tender to buy a 500,000 bl cargo of Light Louisiana Sweet (LLS) or Nigerian Bonny Light crude for 18-20 July delivery to Punta Palenque, Dominican Republic.

LLS sold in the US Gulf coast physical pipeline market this session at premiums to WTI circling $1.30/bl, or roughly $1/bl under October Ice Brent. An estimated 30-60¢/bl cost to load crude at the dock would indicate waterborne LLS values around parity to WTI fob Houston.

But fob values at the US Gulf coast have been trending lower versus their respective pipeline benchmarks amid limited global crude demand during the ongoing Covid-19 pandemic.

WTI fob Houston was assessed at roughly parity to the WTI Houston pipeline index this session but has averaged a 15¢/bl discount since Friday’s start to the August US trade month. Waterborne WTI also averaged a 15¢/bl discount to the pipe-line benchmark throughout the July trade month, down from an average 12¢/bl premium during June trade.

In other news, crude output has resumed in eastern Libya for the first time since blockades paralyzed the country's oil sector in January and could lead to reduced demand for US light sweet crude in Europe.

The Mesla field — which was producing 60,000-80,000 b/d in the months before the shutdown — restarted last night, according to a field engineer. Mesla output is typically comingled with Sarir production and exported from the Marsa el-Hariga terminal.

Libya’s production is not being exported yet, as a force majeure is still being maintained at the country’s eastern export terminals.

Attempts to reopen eastern ports could be circumvented if the Libyan National Army (LNA) intercedes to take over the terminals. Maintenance work has been carried out at eastern Libyan fields during their shutdown, but a Libyan source warned that the pro-

longed disuse could hamper efforts to ramp up output. Eastern fields could add as much as 600,000-750,000 b/d to

Libyan production, which Argus estimates averaged just 80,000 b/d in May. Only the offshore Al Jurf and Bouri fields have been producing reliably throughout the blockades.

Assessment rationaleThe ANS assessment against CMA Nymex WTI was adjusted to maintain the spread to CMA Ice Brent established when the grade last traded.

hh

-4

-2

0

2

4

6

8

27 Feb 20 8 Apr 20 20 May 20 1 Jul 20

SGC = 0

WTI Houston vs SGC $/bl



Latin america

Offers were due this session on Dominican Republic's Refidom-sa tender to buy 500,000 bl of light sweet crude for 19-20 July delivery to the port of Punta Palenque.

The company was seeking US Light Louisiana Sweet (LLS) or Nigerian Bonny Light, two grades typically listed in its crude tenders. But absent from this latest tender was Argentinian Medanito crude which it also usually lists as an option.

LLS offers were to be made relative to WTI, while those for Bonny relative to Dated Brent. Offers will remain valid until 3 July.

Prompt-month LLS was on Wednesday reported trading in the US Gulf coast physical pipeline market at a $1.30/bl premium to WTI Nymex, for a volume-weighted average of the same value.

If the tender is awarded for Bonny Light, it will be the first west African crude to arrive at the port this year, according to oil analytics firm Vortexa. In 2019, five west African cargoes ar-rived at the port, while 11 shipments arrived in 2018.

And next session bids are due for Chilean Enap's Argentinian arm Sipetrol and Argentinian Compañía General de Combustibles' tender to sell 250,000 bl of light sweet Maria Ines crude.

The parcel would be expected to load 22-27 August from the port of Punta Loyola, Argentina. Bids are due on an fob-basis relative to Ice Brent.

Elsewhere, Brazil's crude exports jumped by 22.3pc to 1.907mn b/d in May compared with April, and by almost 75pc on the year, according to data from oil regulator ANP.

China's share of exports in May accounted for around 67pc, up from almost 53pc in the same period of 2019, according to data from Brazil's foreign trade ministry. Around 54pc of receipts from crude exports in January-May 2020 came from China, down from almost 64pc in the same period of 2019.

mexico K-factors $/bltiming K-factor

Maya USGC Jul -3.55

Maya USWC Jul -4.85

Maya Europe Jul -8.20

Maya Asia Jul -5.40

Isthmus USGC Jul -3.50

Isthmus USWC Jul -0.45

Isthmus Europe Jul -6.70

Isthmus Asia Jul -3.75

Olmeca USGC Jul -2.10

Olmeca Europe Jul -6.05

South america $/bl

timing Basis Diff low/high Low/High

Colombia

Vasconia Prompt Oct WTI -0.73/+0.27 39.36-40.36

Oct Ice -2.75/-1.75

Castilla Prompt Oct WTI -3.23/-2.23 36.86-37.86

Oct Ice -5.25/-4.25

Argentina

Escalante Prompt Oct WTI -0.48/+0.52 39.61-40.61

Oct Ice -2.50/-1.50

mexico $/bl

timing Basis Diff Price

Maya

Excluding USWC Jul Aug Nymex -2.14 37.68

USWC Jul Aug Nymex -3.44 36.38

Europe Jul Sep Dated Brent -8.56 33.83

Asia-Pacific Jul Sep Dubai -4.89 37.60

Isthmus

Excluding USWC Jul Aug Nymex -2.09 37.73

USWC Jul Aug Nymex +0.96 40.78


Asia-Pacific Jul Sep Dubai -3.24 39.25

Olmeca

Americas Jul Aug Nymex -0.69 39.13


France, the Netherlands, Malaysia and India also increased their share of Brazilian crude exports in May compared with 12 months earlier.

Meanwhile, a cargo of Venezuelan crude arrived at the 235,000 b/d refinery run by Italy's integrated Eni and Kuwait's state-owned KPC at Milazzo, Sicily.

Around 1mn bl is on board the Delta Tolmi waiting to dis-charge, and will be the first Venezuelan crude at Milazzo since February 2019.

hh

-10

-5

0

5

10

2 Jan 20 3 Mar 20 1 May 20 1 Jul 20

Basrah Light = 0

Vasconia vs Basrah Light fob Sidi Kerir $/bl



Canada

There were no Canadian crude prices because of Canada Day holiday.

Canada domestic $/bl


weighted average

Diff MTD weighted


average

Syncrude (SPP) na CMA Nym na na na na na na na

WCS na CMA Nym na na na na na na na

WCS Cushing Aug CMA Nym -2.50 -2.00 -2.25 -2.47 37.48 37.98 37.73

Canada waterborne prices $/bl

Timing Basis Diff low/high Low/High

Hibernia Dated North Sea na/na na-na

Terra Nova Dated North Sea na/na na-na

Canada domestic $/bl

Timing Basis Diff low/high Low/High

Condensate na CMA Nym na/na na-na

MSW na CMA Nym na/na na-na

LSB na CMA Nym na/na na-na

LLB na CMA Nym na/na na-naCME Nymex light sweet $/bl

Timing Open Low High 4:30pm London

1:30pm Houston

settle±

Aug 39.84 39.05 40.58 39.79 39.82 +0.55

Sep 39.88 39.11 40.61 39.87 39.92 +0.58

Oct 40.01 39.21 40.71 39.98 40.09 +0.61

Nov 40.10 39.29 40.75 40.07 40.23 +0.65

Ice Brent $/bl

Timing Open Low High 4:30pm London

1:30pm Houston

settle±

Sep 41.58 41.03 42.62 42.01 42.03 +0.88

Oct 41.69 41.10 42.66 42.05 42.11 +0.84

Nov 41.85 41.24 42.78 42.13 42.24 +0.85

Assessment rationaleWCS Cushing was assessed at the midpoint of possible trade, with the offer level reflected at the high end and the low end unchanged on no fresh bid discussion.WCS Houston was assessed at the midpoint of bids and offers.



EIA wEEkly dAtA

US refinery inputs ’000 b/d

15,000

15,500

16,000

16,500

17,000

17,500

18,000

18,500

19,000

May 19 Aug 19 Nov 19 Mar 20 Jun 20

— EIAInputs 4 Week Moving Avg

US crude inventories mn bl

380

400

420

440

460

480

500


— EIAStocks 4 Week Moving Avg

US crude imports ’000 b/d

5,600

6,200

6,800

7,400

8,000

8,600

9,200


— EIAImports 4 Week Moving Avg

Industry statistics ’000 b/d

EIA Change

Production 11,000 0

Imports 5,969 -571

Total Stocks 533,527 -7,195

Runs 14,033 193

Percent Utilization 75.5% 0.9

Stocks Padd 1 12,504 -21

Stocks Padd 2 136,846 -1,096

Stocks Padd 3 303,967 -4,029

Stocks Padd 4 25,585 77

Stocks Padd 5 54,625 -2,126

Imports Padd 1-4 4,917 -775

Imports Padd 1 510 -60

Imports Padd 2 2,631 -122

Imports Padd 3 1,434 -519

Imports Padd 4 342 -74

Imports Padd 5 1,053 204

Runs Padd 1 599 8

Runs Padd 2 3,402 -16

Runs Padd 3 7,652 169

Runs Padd 4 590 -1

Runs Padd 5 1,790 33

— EIA



Deals Done

north america pipeline deals done

Grade location Trade month

Basis month Differential basis Differential Price $/bl Volume b/d

LLS St. James Louisiana Aug Aug WTI +1.30 1,000LLS St. James Louisiana Aug Aug WTI +1.30 1,000LLS St. James Louisiana Aug Aug WTI +1.30 2,000Mars Clovelly Louisiana Aug Aug WTI +1.00 3,000Mars Clovelly Louisiana Aug Aug WTI +1.05 1,000Mars Clovelly Louisiana Aug Aug WTI +1.05 1,000Mars Clovelly Louisiana Aug Aug WTI +1.05 2,000Mars Clovelly Louisiana Aug Aug WTI +1.05 2,000Mars Clovelly Louisiana Aug Aug WTI +1.05 2,000Mars Clovelly Louisiana Aug Aug WTI +1.05 3,000Mars Clovelly Louisiana Aug Aug WTI +1.05 9,000Mars Clovelly Louisiana Aug Aug WTI +1.10 1,000Mars Clovelly Louisiana Aug Aug WTI +1.10 1,000Mars Clovelly Louisiana Aug Aug WTI +1.10 2,000WTS Midland Texas Aug Aug WTI Midland -0.25 1,000WTS Midland Texas Aug Aug WTI Midland -0.15 1,000WTS Midland Texas Aug Aug WTI Midland -0.15 2,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.11 1,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.11 5,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.10 2,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.09 1,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.09 1,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.09 4,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.09 5,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.09 5,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.09 7,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.07 1,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.07 1,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.07 5,000WTI Cushing Oklahoma Aug Aug CMA Nymex trade days -0.06 5,000WTI Midland Enterprise Aug Aug WTI -0.10 1,000WTI Midland Enterprise Aug Aug WTI -0.10 1,000WTI Midland Enterprise Aug Aug WTI -0.10 1,000WTI Midland Enterprise Aug Aug WTI -0.10 1,000WTI Midland Enterprise Aug Aug WTI -0.10 1,000WTI Midland Enterprise Aug Aug WTI -0.10 2,000WTI Midland Enterprise Aug Aug WTI -0.10 2,000WTI Midland Enterprise Aug Aug WTI -0.10 2,000WTI Midland Enterprise Aug Aug WTI -0.10 3,000WTI Midland Enterprise Aug Aug WTI -0.05 1,000WTI Midland Enterprise Aug Aug WTI -0.05 5,000WTI Midland Enterprise Aug Aug WTI 0.00 1,000WTI Midland Enterprise Aug Aug WTI 0.00 1,000WTI Midland Enterprise Aug Aug WTI 0.00 1,000WTI Midland Enterprise Aug Aug WTI 0.00 1,000WTI Midland Enterprise Aug Aug WTI 0.00 1,000WTI Midland Enterprise Aug Aug WTI 0.00 2,000WTI Midland Enterprise Aug Aug WTI 0.00 2,000WTI Midland Enterprise Aug Aug WTI 0.00 5,000WTI Midland Enterprise Aug Aug WTI +0.05 2,000WTI Midland Enterprise Aug Aug WTI +0.05 2,000WTI Midland Enterprise Aug Aug WTI +0.05 5,000



Deals Done (continueD)

WTI Midland Enterprise Aug Aug WTI +0.10 1,000WTI Midland Enterprise Aug Aug WTI +0.10 1,000WTI Midland Enterprise Aug Aug WTI +0.10 2,000WTI Midland Enterprise Aug Aug WTI +0.10 2,000WTI Midland Enterprise Aug Aug WTI +0.10 2,000WTI Midland Enterprise Aug Aug WTI +0.10 2,000WTI Midland Enterprise Aug Aug WTI +0.10 3,000WTI Midland Enterprise Aug Aug WTI +0.10 5,000WTI Midland Enterprise Aug Aug WTI +0.10 5,000WTI Midland Enterprise Aug Aug WTI +0.15 1,000WTI Midland Enterprise Aug Aug WTI +0.15 1,000WTI Midland Enterprise Aug Aug WTI +0.15 1,000WTI Midland Enterprise Aug Aug WTI +0.15 1,000WTI Midland Enterprise Aug Aug WTI +0.15 2,000WTI Midland Enterprise Aug Aug WTI +0.15 2,000WTI Midland Enterprise Aug Aug WTI +0.15 3,000WTI Midland Enterprise Aug Aug WTI +0.15 4,000WTI Midland Enterprise Aug Aug WTI +0.20 2,000WTI ECHO Houston Aug 40.25 32WTI Magellan East Houston Aug Aug WTI +1.00 2,000WTI Magellan East Houston Aug Aug WTI +0.90 2,000WTI Magellan East Houston Aug Aug WTI +0.90 1,000WTI Magellan East Houston Aug Aug WTI +0.95 1,000WTI Magellan East Houston Aug Aug WTI +0.85 1,000WTI Magellan East Houston Aug Aug WTI +0.90 2,000WTI Magellan East Houston Aug Aug WTI +0.90 5,000WTI Magellan East Houston Aug Aug WTI +0.85 3,000WTI Magellan East Houston Aug Aug WTI +0.95 1,000Thunder Horse Clovelly Louisiana Aug Aug WTI +1.00 3,000Thunder Horse Clovelly Louisiana Aug Aug WTI +1.05 2,000Thunder Horse Clovelly Louisiana Aug Aug WTI +1.05 3,000Thunder Horse Clovelly Louisiana Aug Aug WTI +1.10 2,000Thunder Horse Clovelly Louisiana Aug Aug Mars -0.05 1,000Thunder Horse Clovelly Louisiana Aug Aug Mars 0.00 7,000Bakken Cushing Oklahoma Aug Aug WTI +0.35 3,000Bakken Beaumont / Nederland Aug Aug WTI +0.75 10,000WTL Midland Midland Texas Aug Aug WTI Midland -0.45 1,000WTL Midland Midland Texas Aug Aug WTI Midland -0.45 2,000WTL Midland Midland Texas Aug Aug WTI Midland -0.45 2,000WTL Midland Midland Texas Aug Aug WTI Midland -0.45 3,000WTL Midland Midland Texas Aug Aug WTI Midland -0.40 1,000WTL Midland Midland Texas Aug Aug WTI Midland -0.40 3,000

north america pipeline deals done

Grade location trade month

Basis month Differential basis Differential Price $/bl Volume b/d



Infrastructure news

Phillips 66 Wood River reports flaringA flaring event occurred earlier this week at Phillips 66's 356,000 b/d refinery in Roxana, Illinois. Flaring started around at 11pm ET on 29 June, and the release was stopped the fol-lowing day, according to a filing to state hazardous materials monitors. Phillips 66 did not comment on the unit involved.

Phillips 66 Ponca City started FCC last weekA fluid catalytic cracking (FCC) unit started up at Phillips 66's 194,000 b/d refinery in Ponca City, Oklahoma, last week.

Increased emissions during the startup from within the unit's regenerator occurred on 24 June, according to a filing to state environmental monitors.

The refiner said in May it had deferred upgrades on an FCC in order to hold onto cash and limit on-site workers during the Covid-19 pandemic.

FCCs convert vacuum gasoil primarily to gasoline blendstocks.

BP-Husky Toledo reports process unit upsetA malfunction with a fuel gas system led to increased emis-sions yesterday at BP-Husky's 170,000 b/d joint-venture refin-ery in Toledo, Ohio.

The refiner notified state environmental monitors of the upset on 30 June, which resulted in two hours and 24 minutes of increased emissions.

BP operates the refinery in a joint venture with Canadian integrated firm Husky.

Phillips 66 Ferndale FCC flares last weekA fluid catalytic cracking (FCC) unit upset led to increased flaring on 24 June at Phillips 66's 100,000 b/d refinery in Ferndale, Washington.

The refiner notified regional air quality monitors that flar-ing occurred for seven hours.

FCCs convert vacuum gasoil primarily to gasoline blendstocks.

InDustrY news

US crude stocks fall by 7.2mn blUS crude inventories fell by 7.2mn bl to 533.5mn bl last week as refinery runs increased, according to the Energy Information Administration (EIA).

The total fell from a record high of 540.7mn bl in the previous week and is about 15pc above the five-year aver-age for this time of year.

Crude stocks in the US Strategic Petroleum Reserve (SPR) moved higher by 1.7mn bl to 655.4mn bl in the week ended 26 June, as the US leases space to private companies in an effort to help with a supply glut. The SPR stocks are not included in the overall EIA commercial crude inventory figures.

Stocks at the key Cushing, Oklahoma, hub, eased by 260,000 bl to 45.6mn bl in an eighth week of withdrawals.

US refiners processed an average of 14mn b/d of crude last week, up by 193,000 b/d from the previous week, the EIA said. Refineries operated at 75.5pc of capacity.

US crude production was flat at 11mn b/d. Production has been trending lower this year as US producers have cut output as efforts to contain the Covid-19 pandemic have caused a plummet in oil demand. Crude output last week was down by 1.2mn b/d from a year earlier.

US crude exports last week fell by 65,000 b/d to about 3.1mn

b/d compared to the previous week, according to EIA estimates.Crude imports fell by 571,000 b/d to about 6mn b/d.

Imports from Saudi Arabia fell sharply after swelling in previous weeks because of the arrival of very large crude carriers (VLCCs) chartered by Saudi state-owned shipping company Bahri. Saudi imports averaged 826,000 b/d last week, down from 1.4mn b/d in the prior week.

Gasoline inventories held fairly flat on the week at 256.5mn bl. Diesel stockpiles were also effectively un-changed, at 174.1mn bl.By Eunice Bridges

US imports of Opec crude down sharplyUS crude imports from Opec countries fell in April to the low-est level since at least 1973, according to the latest Energy Information Administration (EIA) monthly data.

Imports from Opec members averaged 641,000 b/d in April, down by 166,000 b/d from the previous month. It marked the lowest monthly average in the EIA database.

The lower figure partially reflects that imports from Ecuador are no longer included in the Opec total, as that country left the group in January. The US imported 164,000 b/d from Ecuador in April.

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Saudi Arabia sent the most crude to the US among Opec countries in April, with 414,000 b/d. The second highest Opec shipper to the US in April was Iraq, with 139,000 b/d.

Saudi crude imports to the US have been dropping steadily over the past few years from an average of about 1.1mn b/d in 2016 to an average of 500,000 b/d in 2019. Saudi imports averaged about 430,000 b/d in the first three months of this year, according to the EIA.

But crude imports from Saudi Arabia should trend much higher when the EIA reports data on subsequent months because of the arrival of a fleet of very large crude carriers (VLCCs) char-tered by Saudi state-owned shipping company Bahri.

Among all countries, Canada is the top source of US crude imports with 3.6mn b/d in April.

Meanwhile, overall US crude exports fell by more than 13pc in April but stayed above 3mn b/d as efforts to combat the Co-vid-19 pandemic slashed global demand. US crude exports aver-aged about 3.1mn b/d in April, down from 3.6mn b/d in March.By Eunice Bridges

Court allows enbridge to start part of Line 5A Michigan county court ruled today that Enbridge can restart a segment of its 540,000 b/d Line 5 crude and natural gas liquids (NGL) pipeline while an investigation is pending into recently discovered damage.

The ruling in the Ingham County Circuit Court allows Enbridge to restart the west leg of the system which crosses under the Great Lakes. As it travels under the Straits of Macki-nac, Line 5 splits into two 20-inch-diameter parallel pipelines.

Enbridge said today it will begin safely restarting the west segment and anticipates operations will soon return to normal.

The east leg of the system has been shut since 18 June after Enbridge discovered a “disruption" to an anchor sup-port. The company said in a hearing yesterday that a screw anchor on the east leg is bent.

Ingham County judge James Jamo on 25 June ordered Enbridge to also shut the west leg after Michigan request-ed an emergency injunction.

Jamo said in the ruling today that the west leg can restart for the purpose of conducting an in line investigation (ILI) to further assess any possible damage to that leg of the pipeline. The ILI is needed to fulfill requirements for “the exercise of due care by a reasonably prudent person for the safety and welfare of all persons and of all public and private property”

in compliance with the pipeline’s original 1953 easement and a 2018 agreement with Michigan, Jamo said.

The west line “may continue to operate thereafter subject to the results of the ILI and further order of this court,” he said.

Enbridge said it will conduct an ILI run on the west seg-ment and share its findings with the state in accordance with the court’s orders.

Line 5 carries light crude, light synthetic crude and NGLs from Superior, Wisconsin, to Sarnia, Ontario. Line 5 feeds refineries in Detroit, Michigan, and Toledo, Ohio. The system also supplies NGLs which are refined into pro-pane at a facility in Rapid River, Michigan.

At the virtual hearing yesterday, Enbridge argued that the state of Michigan does not have the authority to regu-late interstate oil pipelines and that the state presented no evidence that the west leg of the line was unsafe.

Michigan officials told the court that “there is a serious risk of harm to natural resources” and to many communities. The state argued that both lines should remain shut until Enbridge provides more information on Line 5 so regulators can deter-mine whether it is “reasonably prudent” to restart it.

Enbridge chief executive Al Monaco in a letter on 21 June told Michigan governor Gretchen Whitmer (D) the company would not resume operation on the east leg without discus-sions with Michigan and approval from federal regulators.

Enbridge said today that the east leg will remain shut as it works with the US Pipeline and Hazardous Materials Safety Administration to ensure all of the safety assessments are complete and data provided prior to restarting.

A state court earlier this month backed an agreement Enbridge reached with Michigan to build a $500mn tunnel under the Straits of Mackinac to house part of Line 5. The company says the tunnel would bolster protections from anchor strikes and other damage.By Eunice Bridges

US drops rule to delay oil royalty paymentsPresident Donald Trump’s administration has quietly withdrawn a rule that was expected to cite Covid-19 as the basis for al-lowing oil and gas operators on federal land to defer paying government royalties for three months.

The royalty payment delay rule was marked as “with-drawn” on 29 June, according to a government database of rules that are under interagency review at the White House. The US Interior Department’s Office of Natural Resources






iNDUSTRY NewS

Revenue (ONRR), which has previously declined to discuss the rule, did not respond to a request for comment.

Oil and gas industry officials had expected the rule would have provided operators a three-month deferral of royalty pay-ments, as a way to help conserve cash for operators struggling from low energy prices caused by Covid-19.

But details about the pending rule prompted backlash from Democrats in the US Congress, who said there was no basis for the administration to rewrite rules to “bail out” oil and gas companies that were struggling before the pandemic. Oil and gas royalty payments to the federal government totaled $5.7bn from September-May, the first nine months of fiscal 2020, and about half of those payments are shared with states.

“It is unclear why the public should accept the industry’s de-mands for special treatment at face value, or why this administra-tion thinks now is a reasonable time to institute a blanket delay in payments,” US House Natural Resources Committee chairman Raul Grijalva (D-Arizona) wrote in a 27 May letter to the director of the White House Office of Management and Budget.

Oil prices have recovered somewhat since May, when ONRR submitted the rule for internal review at the White House. An oil industry official last week said election-year politics might have caused the rule to stall after it was submitted.

ONRR yesterday separately sent a letter to oil and gas leaseholders extending by three months, until 1 October, the deadline to recalculate and pay royalties based on a 2016 rule the administration unsuccessfully tried to throw out. The agency cited disruptions from Covid-19 as the basis to give operators more time to comply with the rule, which was expected to cost industry upwards of $72mn/yr.

The Trump administration has used other mechanisms to lower royalty payments by oil and gas operators on federal land. Interior since this spring has approved 12 applications from offshore operators for royalty relief on a monthly basis. The agency also has approved requests on 338 onshore leases to reduce royalty rates to as low as 0.5pc, according to a government database.

The US Bureau of Land Management this summer also plans to propose a rule that would eliminate royalties on gas that is flared because of pipeline or processing limits, so long as the flaring is "consistent with state or tribal rules, regulations or orders," according to a regulatory agenda published yesterday. By Chris Knight

Alaskan oil demand at USwC ebbsAlaskan North Slope (ANS) production rose last week while cargoes in transit to the US west coast waned despite increased refining.

ANS production in the week ended 26 June rose by 6,000 b/d to nearly 395,000 b/d, according to the Alaska Department of Revenue (ADR).

The Prudhoe Bay region produced over 6,000 b/d more last week to reach more than 290,000 b/d, while production in the Kuparuk Region ebbed by roughly 600 b/d to over 64,000 b/d.

The June 2020 production monthly average of about 392,000 b/d represents more than an 18pc decline from prior year.

US independent ConocoPhillips plans to begin restoring curtailed production in Alaska this month after Covid-19 de-mand loss forced Alaskan oil producers to shut in.

At the US west coast, refining runs increased by 1.88pc or 33,000 b/d to 1.79mn b/d last week, helping draw stocks in the region by nearly 4pc or 2.13mn bl to 54.63mn bl in the week ended 26 June, according to the latest available statistics from the US Energy Information Administration (EIA) published today.

Percent utilization at the US west coast also increased from 64pc to 65.3pc, but ANS demand at the US west coast has fallen during the August trade cycle.

ANS was last reported trading on 12 June at a $1.50/bl pre-mium to CMA Ice Brent, for a preliminary volume weighted aver-age $1.30/bl premium for August arrivals at the US west coast.

ANS was reported sold 14 times last trade month at discounts to the international benchmark Ice Brent between $5.10/bl and 50¢/bl, compared to seven deals reported so far at higher prices.

Cargoes of Alaskan oil in transit to the US west coast fell last week by over 23pc, or 705,000 bl, to 2.33mn bl, while competing imports increased by over 24pc, or 204,000 b/d, to 1.1mn b/d.

Also last week, US president Donald Trump’s administration said it was opening 7mn acres of land in the National Petro-leum Reserve in Alaska (NPR-A) to oil and gas development, a change adopted ahead of a lease sale in December. By Benjamin Peyton

Oil companies won favorable terms for SPRSome oil companies storing crude in the US Strategic Petro-leum Reserve (SPR) under a special program are compensating the federal government with crude that would sell for substan-tially less than the cost of commercial storage.

Nine oil companies and trading firms signed contracts in

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April to store up to 23mn bl of crude in the SPR in anticipation of a recovery in prices. Injections under the program were scheduled to finish up yesterday.

Payments for storage costs are made in crude. Three of the companies have contracts under which they will provide an amount of sweet and sour grades that, based on yesterday’s WTI Houston price of $40.21/bl, would translate into paying 4¢-44¢/bl per month for storage, according to an Argus analysis of govern-ment contracts obtained under the Freedom of Information Act.

That compares with a cash storage price of 55¢/bl per month during a 7 April auction for sour commercial storage space in May and June at the Louisiana Offshore Oil Port.

But other companies have committed to pay higher stor-age fees. And beyond the storage costs, the program offers broader benefits, by enabling producers to avoid shutting in production and by boosting the US' emergency stocks.

The US Energy Department began the program on 2 April as a way to help the oil industry during an historic crash in prices and demand, brought about by a sudden disagreement in production levels by Opec+ countries and efforts to limit the spread of the Covid-19 pandemic. The Energy Department, which sought competitive bids for up to 30mn bl of storage, said it would award contracts to the companies offering the highest “exchange ratio,” which is the percentage of crude a company agrees to leave in the SPR each month as payment for using the storage capacity.

The agency eventually leased 23.2mn bl of storage, and it is unclear if any bids were rejected.

Companies will leave an average of 1.9pc of the crude in the reserve each month as payment for storage, or up to 440,000 bl/month, the contract documents show.

But some of the contracts provide far less compensation, at rates that at today's crude prices would be equivalent to a fraction of the cost of commercial storage. The result was the government accepted exchange ratios as low as 0.1pc, or pay-ing 1 bl of crude for every 1,000 bl stored.

Norway’s Equinor submitted the successful bid with the 0.1pc exchange ratio for storing offshore grade Southern Green Canyon, under which it will transfer 320 bl/month for storing 320,000 bl at an SPR facility in West Hackberry, Louisiana. The company won a similar bid to store the same amount of crude at the same facility, paying an exchange ratio of 0.5pc. The company did not respond to a request for comment.

ExxonMobil, which won the largest SPR contract, for 10mn

bl of storage, will pay an average exchange ratio of 0.75pc, or a payment of 74,500 bl/month. The company paid its lowest exchange ratio, 0.25pc, to store 3.5mn bl of crude at the SPR’s Bryan Mound site in Texas. ExxonMobil said it participated in the storage program but did not respond to any questions.

Chevron will pay an exchange ratio of 1pc for storing 750,000 bl of crude at the SPR’s Bayou Choctaw site in Louisiana, or a payment of 7,500 bl/month. Chevron confirmed it was awarded a storage lease but said it does not discuss commercial matters.

The nine companies participating in the storage program signed their contracts on 13-16 April, when storage was in high demand primarily because of a collapse in demand caused by Covid-19 and a surge of supply from Opec+ members. On those days a company with access to storage and transportation could make a profit of $13/bl, by buying a crude futures contract for May delivery at $20/bl and selling the same contract for August delivery at more than $33/bl. The contracts were signed days before a storage crunch in Cushing, Oklahoma, contributed to the Nymex WTI crude price dropping to -$37.63/bl.

The potential profits from a market in contango could have supported decisions by the trading firm Vitol to offer an ex-change ratio as high as 5.6pc for storing 600,000 bl of crude at SPR’s Big Hill site in Texas. The company as a whole agreed to an average exchange ratio of 4.1pc for storing a total of 2.4mn bl of crude at the Big Hill site, meaning it will transfer about 94,400 bl/month to the SPR.

The wide variation in exchange ratios could have been driven by infrastructure constraints, bidding strategies and at-tractiveness of storing crude at specific SPR sites.

The Energy Department did not respond to a request for comment.A program 'worth doing'

The storage program as a whole seems to have been a good deal for taxpayers, consultancy ClearView Energy Partners managing director Kevin Book said. The budget for operating the SPR, alongside recent modernization programs, suggests a cost of nearly 4¢/bl each month to maintain the SPR’s 713.5mn bl design capacity, he said.

The nine companies in the program, on average, will trans-fer to the SPR an amount of crude equivalent to paying 74¢/bl each month at today’s prices. And by next spring, when oil companies are required to withdraw all the crude from stor-age, their payments could add 1.8mn-4mn bl of crude to the SPR, depending on how soon they begin withdrawing.




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The program also benefited the oil sector by opening up large amounts of storage at a time when little was available, avoiding the need for some operators to curtail production. The SPR over the past two months has been filled at an average rate of more than 300,000 b/d, according to government data, which is the equivalent of operating a large refinery. The storage pro-gram added 20.5mn bl of crude into the SPR as of 26 June.

“What is it worth to keep an industry going?” Book said. “If small operators got a boost from this, then there are probably some folks who say that even if it caused wear and tear on the SPR, it was worth doing.”

The Energy Department for more than two months declined to release the terms of compensation, which it said was "con-fidential." Argus last month obtained redacted versions of the contracts through a Freedom of Information Act request, and then successfully filed an appeal challenging the redactions. The agency's quasi-judicial arm, the Office of Hearing and Appeals, last week ruled there was “no basis” to claim the bids were confidential and ordered the agency to release the records. By Chris Knight

Venezuelan crude arrives at MilazzoA cargo of Venezuelan crude has arrived at the 235,000 b/d refinery run by Italy's integrated Eni and Kuwait's state-owned KPC at Milazzo, Sicily.

Around 1mn bl is on board the Delta Tolmi waiting to discharge, and will be the first Venezuelan crude at Mila-zzo since February 2019.

Another two crude cargoes are signalling arrival at Milazzo by 9 July, a 750,000 bl cargo of Baltic Urals and a 700,000 bl shipment of US WTI, according to Argus tracking. This suggests receipts may increase in July from just 90,000 b/d in June, and compared with 145,000 b/d in May, and is likely to be the result of scheduling and Milazzo running crude from storage. Receipts were 155,000 b/d in the first half of 2020, around 65pc of capac-ity in line with statements from Eni on its refinery throughput.

Of last month's crude receipts at Milazzo, 25,000 b/d was Baltic Urals crude from Primorsk, 20,000 b/d Azeri BTC blend, 15,000 b/d Libyan Al Jurf and 10,000 b/d from Iraq's southern loading terminal at Basrah. For the second consecutive month Milazzo took Abu Dhabi's Das Blend, amounting to 15,000 b/d.

Assessed by Argus, Milazzo's crude receipts in June had a weighted average gravity of 33.7° API and 1.2pc sulphur com-pared with 32.4°API and 1.7pc sulphur in May.By Adam Porter

Politics entangling exile PdV boardAn "ad hoc" board of state-owned PdV that is a key part of US-backed opposition leader Juan Guaido’s parallel administration is running into political resistance in the run-up to National Assembly elections in early December.

Ten deputies in the opposition-controlled assembly withheld support for three board appointments yesterday, alleging they were not given enough time to consider their credentials. In a letter yesterday to Guaido, who heads the assembly, the July 16 block of lawmakers — an offshoot of Venezuela’s traditional Accion Democratica party — also complained about a “lack of required transparency” in Citgo, PdV's opposition-controlled US refining arm. The maverick lawmakers pointed to “opacity” in a recent Citgo bond issuance, contracting and donations.

Although the assembly’s communications arm informally tweeted out the new appointments yesterday, these were not officially confirmed by the ad hoc board itself. And the board did not issue a public reply to the dissident lawmakers, although one critic dismissed their opposition as political infighting.

The politics is complicating the opposition's effort to recruit technocrats. Several of Guaido’s associates and advis-ers have recently left his team, in part because the posts are unpaid positions and they had not expected that Maduro would remain long in power in the face of US sanctions.

The preliminary board appointments are industry veterans, led by Horacio Medina, head of PdV’s joint and new ventures division in 1988-2002. He is supposed to replace Maria Lizardo, who resigned along with economist Alejandro Grisanti in May.

Javier Linares, who since October 2019 has been a member of the ad hoc board of PdV’s joint ventures subsidiary CVP, was tapped to replace Grisanti.

And project engineer Luis Vilchez is supposed to take the seat of Gustavo Velasquez, who had served on PdV’s ad hoc board since February 2019.

The nine-member ad hoc board, chaired by exiled PdV vet-eran Luis Pacheco, has no control over PdV’s decaying opera-tions inside Venezuela, which are still in government hands.

The parallel board’s main priority since its February 2019 ap-pointment — shortly after Guaido declared an interim presidency — has been the legal defense of Citgo from multiple creditors, arbitration claimants and bondholders. The matter takes center stage this month as a pivotal legal case advances in Delaware, the corporate headquarters of Citgo’s parent PdV Holding.

A leaked audio of Guaido’s recently resigned attorney general Jose Ignacio Hernandez pointed to the opposition’s

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strategy of favoring ConocoPhillips in the proceedings.Looming elections

Venezuela will hold National Assembly elections on 6 December, a rubber-stamp electoral board (CNE) announced today. Earlier the CNE announced that it would expand the assembly from a current 167 seats to 277.

Indira Alfonzo, president of the five-member CNE board, said yesterday that the expansion will allow “a clear and un-equivocal normative development” during the five-year legisla-tive period that starts in January 2021.

The move would further undermine the sway of the four main political parties in Guaido’s political coalition in favor of splinter groups and the ruling socialist party.

The assembly presidency gave Guaido the constitutional basis for his declaration of an interim presidency in January 2019, with the goal of forcing out Maduro. Despite extensive US sanctions, Maduro has held onto power, with support from Russia, China, Turkey, Iran and Cuba, among others. Scores of Western countries back Guaido and have said the electoral system is not credible.By Patricia Garip

Brazil crude exports, bunker output surgeBrazil’s crude exports jumped by 22.3pc to 1.907mn b/d in May compared with April, and by almost 75pc on the year, accord-ing to data from oil regulator ANP.

The surge points to a further recovery in demand from China, the main outlet for Brazil’s pre-salt crude.

In April, state-controlled Petrobras exported a record 1mn b/d of crude and touted resilient Chinese demand. The company does not publish monthly export data, but regularly publishes notices on fuel and crude export and production records.

Other pre-salt producers such as European firms Shell, Total and Galp are also dispatching pre-salt cargos to Asia. Among these is Shell’s 2mn bl shipment to Qinzhou port in mid-June.

In terms of receipts, China's share of exports in May ac-counted for around 67pc, up from almost 53pc in the same period of 2019, according to data from Brazil's foreign trade ministry. Around 54pc of receipts from crude exports in January-May 2020 came from China, down from almost 64pc in the same period of 2019.

France, the Netherlands, Malaysia and India also increased their share of Brazilian crude exports in May compared with 12 months earlier.

Weaker domestic fuel demand has opened more space for crude exports and reduced the need for crude imports needed for blending. Crude imports dropped to a record low of 59,087 b/d in May. Brazilian refineries, nearly all run by Petrobras, increased domestic crude runs to around 90pc compared with 85pc in May 2019.

The increase is related to more sweet pre-salt crude allocated for the production of low-sulfur marine fuel for export. Petrobras’ fuel oil production, mainly bunker, av-eraged 338,768 b/d in May, an 82pc year-on-year increase and up almost 31pc over April.

Brazil’s fuel oil exports averaged 233,714 b/d in May, a 15.5pc increase over April and up 37pc on the year.

Brazilian oil production averaged around 2.755mn b/d in May, down by 6.5pc from April, and up a slight 1.36pc on the year, ANP data indicates.

Oil production and exports are expected to slow in the coming months as Petrobras launches a maintenance campaign expected to trim around 200,000 b/d from its domestic production portfolio.By Nathan Walters

Argus North American Crude Oil Forward Curves

Argus has launched a forward curves service for North American crude oil markets. The new service covers 24 crude oil grades and trading locations over the midcontinent, North Sea, Gulf Coast, and Canada.

www.argusmedia.com/Crude-Oil-Forward-Curves

https://www2.argusmedia.com/en/news/2116392-guaido-team-favoring-cop-in-citgo-fight-update?backToResults=true

https://www2.argusmedia.com/en/news/2118827-eu-adds-11-venezuelans-to-sanctions-list-update?backToResults=true

https://www2.argusmedia.com/en/news/2118827-eu-adds-11-venezuelans-to-sanctions-list-update?backToResults=true

https://direct.argusmedia.com/newsandanalysis/article/2119542

illuminating the marketsPetroleum


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Argus Americas Crude MethodologyArgus uses a precise and

transparent methodology to

assess prices in all the markets it

covers. The latest version of the

Argus Americas Crude Methodology

can be found at:

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For a hard copy, please email

[email protected], but please

note that methodogies are up-

dated frequently and for the latest

version, you should visit the internet site.

LAST UPDATED: JUNE 2014 The most up-to-date Argus Americas Crude methodology is available on www.argusmedia.comM

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ARGUS AMERICAS CRUDE

www.argusmedia.com

Contents:Methodology overview 2Americas Pipeline Markets 8Americas Waterborne Markets 13Updates 14

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