Iraqi SRFO vs Venezuelan SRFO — the physical market is drawing a clear distinction between two very different 3.5% barrels.
Ahead of driving season, US refiners are sending such a clear signal that these two SRFOs are chalk and cheese in terms of utility.
Demand for Iraqi SRFO is seemingly undisturbed into the US Gulf, despite so much Venezuelan SRFO in the region.
They’re both 3.5%. Venezuelan SRFO probably has the 55% VGO sitting in its shadow also. However, it is no doubt the metals Venezuelan SRFO inherits that make it unsuitable in the FCCs and therefore not in competition with Iraqi SRFO.
One is a light-end optimiser, the other is there to help the bottom of the barrel.
As with Boscan, Hamaca and Merey, Venezuelan SRFO is being absorbed by the US’s booming asphalt industry — or so it portrays itself.
When in actual fact, it is just stockpiling for price protection.
Derivs are giving us an unclear picture at the moment.
Incongruously, the 380cst bear play is retreating, yet spreads are up.
At least we’re getting a little clarity from physical.
