Bloomberg, citing unnamed sources, reports that the trading arm of French supermajor TotalEnergies is gobbling up U.S. crude, pushing WTI crude for delivery at Cushing to the highest premium since November.
The company, called Atlantic Trading and Marketing Inc, appears to be taking advantage of high refining margins created by tight supply and strong demand for fuel.
However, the report suggests that at these price levels, more U.S. oil will stay at home as it becomes too expensive for overseas buyers from Asia and Europe. But that won’t help keep prices down at the pump, Bloomberg’s authors note. On the contrary, even if it stays at home, U.S. crude will drive up fuel prices thanks to its higher price.
Another interesting aspect of these developments, as noted in the Bloomberg report, is that the demand for U.S. oil has surged despite the fact that it cannot replace the lost barrels from Saudi Arabia and Russia. The latter are pumping heavier, sour grades of crude, while WTI is light and sweet.
Still, physical demand for U.S. crude is rising, and why not with refining margins hovering around $30 a barrel? This could lead to a shorter maintenance season for some refiners as they try to capture as much of the high margin as possible.
The U.S. oil benchmark topped $90 per barrel earlier this month as demand concerns and tightening global inventories began to weigh on traders’ bearish sentiment.