DUBAI (Bloomberg) - As oil crashes due to demand destruction and a
price war, it’s easy to overlook an even more dismal reality for
producers: the real prices they’re getting for their barrels are worse
still.
Having collapsed by about 60% this year, Brent and West Texas
Intermediate crude have stabilized at around $25 a barrel, but the price
rout is far deeper for actual cargoes, which are changing hands at
large and widening discounts to the global benchmarks. The discounts
mean that in the physical market, some crude streams are trading at $15,
$10 and even as little as $8 a barrel.
“The physical market is in pain, and there is more pain to come,”
said Torbjorn Tornqvist, the co-founder of Gunvor Group Ltd., a large
trading house. “We will see the full weight of the oversupply in a
couple of weeks.”
Crude oil in the physical market trades at a premium or discount to
Brent, West Texas Intermediate and other benchmarks. At times of
surplus, premiums narrow and discounts widen. But the current situation
is almost unprecedented, with discounts in some cases at multi-decade
highs.
https://www.worldoil.com//news/2020/3/25/oil-prices-are-even-lower-than-they-appear-thanks-to-heavy-discounting
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