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(Bloomberg) — Prices for a key US medium sour crude grade are weakening, underscoring a slowdown for American oil exports.
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Mars crude has declined in five of the last seven trading sessions, losing 75% of its value on Wednesday alone, before gaining slightly on Thursday, according to the latest pricing data from Link Data Services.
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The medium sour grade, which is produced in the Gulf of Mexico, often trades in tandem with the pace of US exports. Prices had been surging as the world turned to American shipments to replace Middle Eastern supplies disrupted by the Iran war.
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But in recent weeks, US exports have cooled from record levels. In turn, the premium Mars crude commands over benchmark West Texas Intermediate has shrunk. The price difference is now about $1.50 a barrel, down from a high of $18 reached in early April.
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US crude exports fell 1.2 million barrels a day to 4.4 million barrels last week, according to Energy Information Administration data released Thursday. In April, the US exported a record volume of more than 6.4 million barrels a day.
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Dwindling US inventories and surging demand from domestic refineries limits the amount of spare crude that can be sent overseas. And meanwhile, there are also signs of slowing oil demand in China.
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Mars and other medium sour grades had been highly sought after by overseas buyers, particularly Asian refiners seeking replacements for Middle East barrels.
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Declining inventories at the key Cushing, Oklahoma, storage hub may also be weighing on Gulf Coast grades.
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EIA data showed Cushing inventories fell to 23 million barrels last week, approaching levels often viewed by traders as near tank bottoms. When Cushing inventories tighten, inland refiners typically compete more aggressively for barrels tied to the hub, often pressuring Gulf Coast crude prices.
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