U.S. West Coast refiners purchase Oman crude, first time in 3 years

Oman crude prices more competitive

Oman crude

At Long Beach, California, roughly 2 million barrels of Oman crude was unloaded in April and May each and about 1 million barrels in June.  

By Liz Hampton

HOUSTON, June 16 (Reuters) – U.S. West Coast refiners have imported several Oman crude cargoes in recent weeks, marking the first arrivals of oil from the Arab country to the United States in nearly three years.

The imports of the medium sour crude blend started entering the United States in April, shortly after the price of crude from Oman became more competitive against other grades that typically feed West Coast refineries.

Roughly 2 million barrels of Omani crude were unloaded in April and May each, and in June nearly 1 million barrels have unloaded, mostly at Long Beach, California, according to Reuters Trade Flows data and sources.

Prior to this, the United States had not imported crude from Oman in nearly three years, according to the U.S. Energy Information Administration, as pricing spreads between Middle Eastern crude and other global benchmarks did not make such imports economically viable.

The first cargo arrived in early April on a Very Large Crude Carrier (VLCC) co-loaded with Kuwaiti crude, according to a source with access to bill of lading data, which details a shipper’s cargo. Another VLCC discharged nearly 2 million barrels in May, and the tanker C. Freedom discharged roughly 870,000 in early June, according to trading sources and Reuters Trade Flows data.

Smaller parcels of Omani crude also discharged in Benicia, California, in April and May, the flows data shows.

The crude was transported from large ships in parcels to refiners including Valero Energy, Shell and BP , according to the flows data.

Tesoro Corp was also involved with the deals, sources said, but the company declined to comment.

Sources familiar with the matter said the cargoes were booked earlier this year when the arbitrage opened. From January to late March 2016, the Brent-Dubai Exchange of Futures Swap (EFS) <DUB-EFS-1M>, which is among the indicators traders eye to detmerine arbitrage windows in and out of Asia, traded above $2.70 a barrel, its widest spread since July 2014.

The wider spread makes grades from the Middle East more attractive than those priced on Brent.

It was not yet clear whether additional cargoes would be booked for this year, but one trading source noted that Alaskan North Slope (ANS) crude, which is almost exclusively fed to West Coast refiners, has been pressured lower to compete with global imports, such as shipments from Oman.

This week, August differentials fell to a $2.60 a barrel discount to CMA WTI, versus a 50 cent premium in April.

(Reporting by Liz Hampton, additional reporting by Florence Tan in Singapore; Editing by David Gregorio)

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