May 12, 2023 [Yahoo!]- A unit of Koch Industries Inc. has returned to the North Sea oil market after being absent for much of the last decade, following the recent overhaul of the world’s most important crude benchmark.
Koch Supply & Trading LP this week was active in the market’s trading of WTI Midland oil. Earlier this month, the Dated Brent benchmark — traditionally comprised of North Sea oil — was expanded to include the US grade in an effort to boost liquidity in the measure.
Specifically, Koch put a 700,000-barrel cargo of the grade into so-called forward chains, according to people with knowledge of the matter.
Chains — common in North Sea oil trading — allow a company with forward contracts to sell actual barrels of oil to another firm, providing a link between the paper and physical markets. The chaining of WTI Midland oil underscores how quickly the US grade has become an integral part of the revamped benchmark.
Koch didn’t immediately respond to requests for comment.
Dated Brent is used to price more than two-thirds of the world’s crude, and its inclusion of WTI Midland is its biggest overhaul in decades. So far, the change has been a success. The US grade has helped set the benchmark’s price and liquidity has doubled.
Since the trading of June North Sea cargoes started on May 2, about 7.7 million barrels of WTI Midland have been put into chains for the first half of June. That’s the same volume for combined exports of the other grades that make up the benchmark: Brent, Forties, Oseberg, Ekofisk and Troll.
The North Sea has been plagued by dwindling supplies in recent years — a key reason for expanding Dated Brent. Loadings of the measure’s five regional grades are set to slide to just over 600,000 barrels a day next month, the lowest in a year, according to data compiled by Bloomberg.
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