Russia’s September ESPO Blend crude oil exports fall 7.69% on month

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Singapore —
Russia’s exports of medium sweet ESPO Blend crude oil are expected to total 2.4 million mt in September, down 7.69% from August, according to the latest monthly loading program.

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ESPO Blend’s September program runs from August 30 to October 1 and will comprise 24 cargoes — each 100,000 mt — and will average 537,455 b/d, according S&P Global Platts calculations using a conversion factor of 7.39.

State-owned Rosneft holds nine cargoes for September, and has sold three for loading over September 5-10, September 10-15 and September 20-25 via tender at premiums of $5.50-$5.80/b over Platts front-month Dubai crude assessments on an FOB basis.

Russia’s Surgutneftegaz on the other hand holds seven cargoes for September loading, and has sold all of them via tender.

Two 100,000 mt cargoes for loading over May 31-June 6 and June 2-7 were sold to a Japanese trading house at premiums of around $4.10/b to Platts front-month Dubai crude assessments, traders said.

Surgut sold 300,000 mt cargo of ESPO Blend crude via two separate tenders for loading over August 31-September 5, September 4-9 and September 8-14 at premiums of $4.80-$5.50 over Platts Dubai. Another four cargoes, each 100,000 mt in size, loading over September 12-16, September 15-19, September 21-25 and September 25-29 were sold to Chinese and Japanese buyers at premiums of around $5.80-6/b over Dubai crude assessments, traders said.

Russia’s Gazprom Neft holds one 100,000 mt cargo for loading over September 3-13 and sold it via tender at a premium of around $5.5/b over Platts Dubai, while Switzerland-based Tenergy holds seven 100,000 mt cargoes for September loading, according to the program.

Premiums for September-loading ESPO barrels traded in July reached close to nine-month highs supported by improved demand from China — the most favored destination for ESPO Blend because of healthy refining margins, trade sources said.

Chinese independent refiners have started to increase their run rates following the release of a new set of crude import allocations for 2019, market and industry sources said.

Chinese independent and other state-owned qualified refineries — 39 in all — have received a second batch of crude import allocations for 2019 totaling 56.37 million mt, sources told Platts in July.

The new allocations bring total quotas awarded so far this year to around 146.84 million mt for 45 refineries.

Refining margins for middle distillate grades were also high, further supporting premiums for ESPO Blend grade.

“The middle distillate margins look good. So any medium barrels are getting good value to China,” a Singapore-based crude trading source said. The M2 Singapore gasoil crack margin against the Dubai swap averaged $16.71/b in July, from an average of $15.68/b in June, according to Platts data.

–Avantika Ramesh, avantika.ramesh@spglobal.com

–Eesha Muneeb, eesha.muneeb@spglobal.com

–Edited by Jonathan Fox, jonathan.fox@spglobal.com