U.S. refining availability and key crude benchmarks
In refining news, U.S. refiners are expected to have about 75,000 bpd of capacity offline in the week ending Aug. 21, according to IIR Energy. That would increase available refining capacity by 88,000 bpd from the prior week. Offline capacity is then projected to fall to just 8,000 bpd in the week ending Aug. 28.
Light Louisiana Sweet for September delivery rose $1.27 to a midpoint of a $3.50 premium and was seen bid and offered between a $3.00 and $4.00 a barrel premium to U.S. crude futures CLc1
Mars Sour rose $1.75 to a midpoint of a $4 premium and was seen bid and offered between a $3.80 and $4.2 a barrel premium to U.S. crude futures CLc1
WTI Midland rose 5 cents to a midpoint of a 70-cent premium and was seen bid and offered between a 50-cent and 90-cent a barrel premium to U.S. crude futures CLc1
West Texas Sour firmed 5 cents to a midpoint of a $1.55 discount and was seen bid and offered between a $1.75 and $1.35 a barrel discount to U.S. crude futures CLc1
WTI at East Houston, also known as MEH, traded between a 80-cent and $1.00 a barrel premium to U.S. crude futures CLc1
ICE Brent October futures LCOc1 rose 60 cents to settle at $91.62 a barrel on Wednesday
WTI September crude CLc1 futures rose 89 cents to settle at $85.83 a barrel on Wednesday
The Brent/WTI spread widened 26 cents to last trade at minus $7.22, after hitting a high of minus $6.85 and a low of minus $7.28.
US refinery demand and Middle East disruptions lift grades
Grades strengthened on Wednesday, dealers said, as crude intake by refineries rose to their highest levels in nearly seven years and as energy disruptions in the Middle East continued to escalate.
Refinery crude runs USOICR=ECI rose by 216,000 barrels per day last week, the highest since September 2019, the Energy Information Administration said on Wednesday, while utilization rates USOIRU=ECI rose by 1 percentage point in the week to 97.2%.
Strait of Hormuz traffic declines and Middle East premiums rise
In the Middle East, the United Arab Emirates suspended financial and economic ties with Iran after accusing them of targeting maritime traffic with missiles. Iran denied involvement in the attacks.
Traffic through the Strait of Hormuz, a key route that once handled about a fifth of global oil and gas shipments, continued to decline. Just six commodity vessels crossed the strait on Tuesday, according to Kpler data released early Wednesday, down from nine the previous day and below the 10-day average of 11.
Concerns about prolonged supply disruptions pushed spot premiums for Middle East crude benchmarks Oman, Dubai and Murban to their highest levels in a month on Wednesday. Abu Dhabi National Oil Co. plans to trim the amount of Murban crude sold to Asian customers in August and September, traders said on Wednesday.
The grades compete with U.S. sour crudes. Mars, the U.S. sour benchmark, rose $1.75 to a $4.00 premium on Wednesday, its strongest level since mid-May.
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