US crude exports displacing Nigerian, W-African crudes

Light Louisiana Sweet and MEH, which represents WTI Midland crude at the Magellan East Houston Terminal, were assessed at parity Monday, for the first time in almost a month, as MEH displaces comparable West Africa crudes in Europe, Platts reports.

With an API gravity of 38 to 40 degrees, WTI Midland crude is of a higher quality than Nigeria crudes Bonny Light with an API gravity of 35 degrees, Escravos with an API gravity of 33.51 degrees, and Qua Iboe with an API gravity of 36 degrees.

The current cost of WTI Midland arriving in Europe is Dated Brent plus $1/b, according to one crude trader. Freight rates for shipping West African crude from Nigeria to Rotterdam on a Suezmax tanker are put at $1.34/b. Added to that, Bonny Light FOB Nigeria London versus the WAF Dated Strip is at plus 15 cents/b, Qua Iboe FOB Nigeria versus the WAF Dated Strip is 55 cents/b, and Escravos FOB Nigeria versus the WAF Dated Strip is minus 15 cents/b. This puts all three Nigerian crudes at a premium to the price fetched for WTI Midland arriving in Europe.

WTI Midland’s ability to be delivered to Europe more cost effectively and its higher quality than these West African crudes has caused demand for WTI Midland outside the US and in Europe to increase, according to a market source. Since the US crude export ban was lifted, several shipments of US light crude, including WTI Midland grade crude, have been exported to markets outside the US.

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