Russian Urals crude dropped to its biggest discount versus Dated Brent in more than two months as loading programs showed exports to Europe are poised to increase in January.
The Urals differential in northwest Europe increased to $1.35 a barrel less than Dated Brent today, according to data compiled by Bloomberg. That’s the largest since Oct. 9. In the Mediterranean, the grade’s discount to the benchmark widened to $1.01, the most since Oct. 25, the data show.
Shipments of the blend from the Black Sea port of Novorossiysk will climb to 3.295 million metric tons in January, or 779,108 barrels a day, according to a final loading program obtained by Bloomberg News. That’s up 7.4 percent from a revised 3.069 million tons this month. A total of 5.4 million tons, will be shipped from the Baltic port of Primorsk, the final plan showed. That’s up 17 percent from 4.605 million in December.
Russia is the world’s largest energy producer while Europe is the largest importer of Urals. The nation recently extended its East Siberia-Pacific Ocean, or ESPO, pipeline, to boost oil shipments to Asia. ESPO, the country’s most expensive infrastructure project, has the capacity to transport 600,000 barrels a day of crude via the port of Kozmino.
“Russia’s final January loading schedule shows an increase in Urals liftings, implying that westbound seaborne exports will not be negatively affected by the expansion of the ESPO pipeline, at least not in January,” Vienna-based consultants JBC Energy GmbH said in a report. “The higher supply appears to already be taking its toll on the European market for sour crude as assessments have recently come under pressure.”
There are 16 shipments of Urals totaling 1.6 million tons, or 378,323 barrels a day, planned from Ust-Luga on the Baltic Sea, according to the program, down from 1.8 million tons this month. There is one free position at the port in the final January program.
Loading programs are monthly schedules of crude shipments compiled by field operators to allow buyers and sellers to plan their supply and trading activities.