LONDON: The price spread between Urals in the north and south widened on Friday after one trader bid far above the recent market in a time frame with little or no availabilities.
In the Platts window, Vitol offered a 100,000 tonne Urals cargo down to dated Brent minus $1.45 cif Rotterdam loading Dec 19-23 from Baltic ports.
In the south, Lukoil bid for an 80,000 tonne Urals cargo loading Dec 21-25 at dated Brent plus 50 cents cif Augusta.
Socar offered a 600,000 barrel cargo at dated Brent plus $2.90 cif Augusta loading Dec 19-23.
Traders said Lukoil's Urals bid was very strong and above what most of the market would be prepared to pay. "They must have specific shorts in the Black Sea," one trader said.
"Lukoil is bidding non-existing dates, all cargoes placed in that period," another trader said, adding that the market overall was closer to dated Brent flat.
The bid makes the price spread between north and south nearly $2 a barrel, an unusually wide gap.
Vitol's offer was not surprising as the northern market has already been losing ground because traders cannot send excess barrels to the tighter Mediterranean as ice-class tankers are too expensive.
Azeri Light weakened in line with other light grades, which have been losing ground owing to poor margins and with plenty of alternatives available.
"West African, Algerian, Northwest Europe, margins are really poor and the US is becoming more and more independent so West African barrels can come more easily to the Mediterranean," a Mediterranean refiner said.
Algeria's Saharan Blend and Kazakh CPC Blend prices also dipped earlier this week.
The oil market is on the cusp of a new cycle, Goldman Sachs said on Friday, with demand in the United States growing at a faster pace than in emerging economies such as China and India for the first time in a decade.
Transcanada Corp told shippers on Thursday that its 700,000 barrels-per-day pipeline from Cushing, Oklahoma, to Port Arthur, Texas, will be in service by mid-January.
The Gulf Coast pipeline is among a slew of projects expected to move a glut of US crude from the Cushing storage hub to the refining hub in the Gulf Coast.
The change of the US pipeline map and rising production has already cut the country's crude imports drastically, already creating periodic gluts of light sweet crude.
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