Differentials on the CIF Rotterdam Urals Aframax market hit a 15-month high Wednesday, amid expectations of a very short February loading program, as well as higher freight rates, adverse weather driving demand for distillate-rich grades and Saudi Arabia cutting its allocations for Northwest European delivery.

S&P Global Platts assessed Aframax cargoes of Urals, basis CIF Rotterdam, at a discount of $1.70/b to the Mediterranean Dated Strip Wednesday, its highest level relative to the 13-28 day forward Dated Brent market since October 6, 2015.

One of the main drivers behind the upward tick over recent days is the shorter preliminary Urals loading program for February. Despite only the first five days being published so far, these are already one Aframax cargo shorter than in the same five days of the previous month, leading traders to predict that the overall program will be very short.

“The January program was already shorter than the December program so despite one cargo less initially not looking to be a major bullish factor, it is the fact that the program continues to get shorter month on month on month and there is a lack of alternatives that could make it to NWE in time,” one trading source said.

Alternative crude grades to Urals for NWE would be Basrah Light, as well as Kurdish or South American crudes. However, these wouldn’t arrive until towards the third decade of February, leaving the first and second decades short of alternative crudes.

On top of this, Saudi Arabia has cut its crude allocations for delivery to Northwest Europe, further decreasing likely supply.

High Aframax freight rates on both UK-Continent and Mediterranean routes have also been cited as reasons for the upward trend in values over the past couple of weeks.

Despite Aframax Worldscale rates having come down over the past week, freight has increased by w60 points in January 1-18 for the Baltics to the UK-Continent Aframax route.

Increasingly, harsh weather conditions and high demand for Aframax vessels have contributed to the freight rate spike.

Meanwhile, the Mediterranean Urals market has also seen its differentials rise after the publication of the shorter February program.

Platts assessed the Urals Aframax CIF Augusta market at a discount of $1.15/b to the Mediterranean Dated Strip, its highest level relative to the 13-28 day forward Dated Brent market since December 7, when it was at a discount of $1.10/b.

Source: Platts