Mars crude falls from 5-year high ahead of Gulf refinery repairs

HOUSTON,  (Reuters) - Mars Sour, a U.S. offshore crude grade, fell sharply as market participants focused on upcoming Gulf Coast refinery maintenance work expected to take crude units offline and reduce demand for the medium sour grade, traders said.

Mars barrels for delivery in March traded at a $5.20 premium to U.S. crude futures, weakening after reaching a five-year high of $7.35 last week amid rising demand for the medium sour crude, traders said.

Production cuts by the Organization of Petroleum Exporting Countries have made medium sour grades similar to Mars harder to find for refiners worldwide, increasing demand for “overseas buyers looking to replace Middle East barrels,” Morningstar analyst Sandy Fielden wrote in a client note on Monday.

Demand for medium sour grades has risen in South Korea, India, Japan, Malaysia, Singapore and China, Fielden said, noting Chinese purchases of U.S. crude have fallen sharply in recent months amid the U.S.-China trade war.

But domestic demand for Mars began to normalize ahead of Gulf Coast refinery turnarounds scheduled for March and April, traders said. Mars on Monday traded near the same levels as West Texas Intermediate at East Houston, also called MEH, and at a $1.50 to $2 discount to Light Louisiana Sweet, a normal range, traders said.

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