
INCREASED LIQUIDITY, LESS VOLATILITY
Volumes of WTI Midland crude headed across the Atlantic have climbed since its inclusion in the Dated Brent index.
WTI Midland exports hit a record at 2.94 million bpd in December, according to data from ship tracker Kpler, up by around 550,000 bpd on the year. About 1.71 million bpd, or more than half of the December volumes, were headed to Europe, noted Matt Smith, lead oil analyst at Kpler.
Surging U.S. crude exports have more than compensated for dwindling North Sea output. The supply of the five grades of North Sea crude that can be delivered into Dated Brent fell to about 537,000 bpd in June from about 607,000 bpd a year earlier, according to loading programs.
North Sea crude output has been falling for decades as producers have already pumped most recoverable oil from the fields.
That had left Dated Brent – and the related Brent futures market – vulnerable to relatively small North Sea supply problems.
“The market has really embraced Midland as a deliverable into the Dated Brent contract,” said Dave Ernsberger, global head of pricing and market insight at S&P Global Platts. “Liquidity in the spot market has doubled with more companies involved.”

Higher liquidity has helped ease the volatility of the benchmark, making the market more stable despite conflict in the Middle East, attacks on shipping in the Red Sea and continuing disruption to oil trade caused by sanctions on Moscow.
Volatility as measured by the daily percentage change in Dated Brent prices fell to 0.05% in the one year since WTI Midland’s inclusion last May. In the previous four years, it was a range of -0.4% to 0.6%.
Since WTI Midland’s inclusion a growing number of companies have participated in Dated Brent trading, said S&P Global Platts’ Ernsberger.
A record 35 cargoes traded in the Platts Market on Close in April 2024, more than four times the number that traded the same month a year ago.
Among those who have traded Dated Brent since the change are Saudi Aramco, top Indian refiner Reliance, U.S. shale producer Occidental Petroleum and U.S. refiner Phillips 66, according to S&P Global and market participants.
“People who previously had no interest in Brent now see opportunity for their business,” said Adi Imsirovic, a trading veteran who has published books and papers on Brent and runs consultancy Surrey Clean Energy.
The trading arm of Australian investment bank Macquarie Group has become a top supplier of WTI Midland to Asia after its inclusion in the contract, Imsirovic said.
Aramco declined to comment, while Reliance, Occidental, Phillips 66 and Macquarie did not respond.
HEDGING
U.S. producers can sell WTI Midland many months forward into the Brent market, locking in future revenues and eliminating some pricing risk, said Ilia Bouchouev, managing partner at Pentathlon Investments and former president of Koch Global Partners, a multinational conglomerate with exposure to refining and global commodities trading.
Trade in the related contracts used to hedge output and the cost of shipping has also risen, analysts said.
This has helped drive up activity in U.S. crude futures markets. Combined WTI Houston and WTI Midland average daily volumes of futures lots traded as differentials to WTI futures soared to 19,188 in May, nearly triple the 7,068 in May 2023.
“The overall global trading pie is getting larger”, Bouchouev said, as traders explore new spread and arbitrage opportunities.
Investors with exposure to Brent contracts are now also exposed to U.S. crude prices.
“We are certainly seeing that reflected in hedging activity” across the WTI complex, said Peter Keavey, global head of energy at the CME.
Traders are using forward freight agreements (FFAs) to hedge the price risk for the cost of shipping the oil across the Atlantic.

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