Oil pricing agency S&P Global Platts said Feb. 24 the market focus was on WTI Midland crude as a potential addition to dated Brent, a move that would look beyond its North Sea home to ensure enough supply underpins the benchmark.
A steady drop in crude production from the North Sea has led to concern that output could become too low and hence could be accumulated by just a few players, making the benchmark vulnerable to manipulation.
Dated Brent is based on five British and Norwegian North Sea crudes—Brent itself, Forties, Oseberg, Ekofisk and Troll, or BFOE as they are known. The price—used in oil deals around the world—is set by the cheapest grade.
A move to add a U.S. crude would widen the focus of the benchmark. In recent years, Platts has steadily added more North Sea grades to the original Brent and said in 2018 a new North Sea crude, Johan Sverdrup, was a prime candidate to go in.
"A lot of the market focus now is on WTI Midland as the potential candidate for future inclusion," the senior director for Platts' Energy Price unit, Jonty Rushforth, said at a news conference on Monday.
"There is not a sense of urgency around adding in new grades."
The lack of urgency is because the recent addition of delivered BFOE cargoes into the benchmark has boosted liquidity, he said.
The pricing agency is expanding its assessment of U.S. crude delivered to Europe. The first trade of a cargo of U.S. crude on a delivered basis to Rotterdam in the Platts market-on-close assessment window appeared in July.
Platts said last week it would start an assessment of WTI Midland on a free on board basis at Scapa Flow in Scotland on March 2, both as an outright price and as a differential to dated Brent.
Reuters News competes with Platts in providing news and information to the oil market.
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