Med Crude-Urals collapses as Glencore dumps prompt cargo
LONDON, Sept 10
LONDON, Sept 10 (Reuters) - Russian Urals crude collapsed to its lowest levels since the end of April as trader Glencore aggressively offered a prompt cargo in the Platts window puzzling traders, who had not anticipated such weakness in a relatively tight European crude market.
Urals has been weakening last week but traders had expected the trend to be short-lived due to very high refining margins, low availability of alternative grades such as Iraqi Kirkuk and a large concentration of volumes in the hands of top players such as Vitol from October.
But on Monday, Urals collapsed in the Baltic with Glencore offering a Sept 20-24 cargo in the Platts window down from dated Brent minus $1.65 a barrel to dated Brent minus $2.55 at which point it was bought by Statoil, traders said.
It took Glencore an unusually high number of 14 consecutive offers to place the cargo with Statoil.
The deal was done $1.2 dollar lower than the previous deal last week - one of the sharpest intraday drops in Urals differentials ever and the weakest levels for the grade since April 2012.
Traders struggled to explain the reason behind Glencore's aggressive offering of Urals.
"They utterly destroyed the grade today," one trader said.
Glencore alongside Vitol and Shell was among the winners of a giant six-month tender of Russian oil major Rosneft.
Prices at which Glencore can pick up volumes at the tender are priced against a formula based on Platts prices.
"The Rosneft tender pricing is around the corner but it has not started yet. Therefore, Glencore's move is even more puzzling," another trader said.
With a plunge that steep, Urals shall recover very quickly.
"Kirkuk's volumes are still very low, the light/sweet market is tight, margins are very good and Russia is preparing to launch a new link to the east. So Urals shall be overall bullish," one trader with a major said.
In other grades, Azeri was perceived stronger after a release of a very short loading programme last week.
"It shall go above $3 per barrel quite soon I believe," said a major trader in Azeri.
September exports of Iraq's largest stream, Basra Light, have been pencilled in at 2.064 million barrels per day, according to a preliminary loading schedule, down compared with the August schedule of 2.14 million bpd.
However, final exports in August turned out to be higher around 2.252 million bpd, according to state company SOMO.
Egypt's EGPC issued a sell tender for a 75,000-80,000 tonne cargo of Ras Gharib loading Dec. 25-27, closing next week, traders said. (Reporting by Dmitry Zhdannikov and Julia Payne; Editing by William Hardy)
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