REPEAT-Traders eye export markets as U.S. crude futures pummeled

Fri Jul 22, 2016 7:00am EDT
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(Repeats with not changes to text.)

* Brent/WTI spread presents window of opportunity

* Vitol said to have secured two vessels

* Pipeline discounts help export economics

By Liz Hampton

HOUSTON, July 21 (Reuters) - A ballooning spread between the price of U.S. and European oil, coupled with lower shipping costs, has traders scrambling to take advantage of what may be a brief window of opportunity to ship crude to higher priced markets.

The premium for Brent futures relative to U.S. West Texas Intermediate (WTI) crude rose above $1.50 barrel on Thursday, its largest level since April, up 50 cents from the start of the week WTCLc1-LCOc1.

European futures have mostly traded at less than a dollar premium to the U.S. benchmark for the past two months, effectively closing off the opportunity to move oil across the Atlantic profitably. Traders typically move crude to markets where it can fetch a higher price, an economic structure known as arbitrage.

With the closely watched spread now widening, ship brokers said the appetite for Aframax tankers, which can carry around 700,000 barrels of product, has picked up, the first sign that traders are positioning themselves for exports.   Continued...