OREANDA-NEWS. August 11, 2017. Strong demand from Asia-Pacific net crude importers seeking to offset a drop in Opec supply is pushing US Gulf coast crude prices sharply higher against benchmark WTI amid a workable export arbitrage.

Key US medium sour Mars climbed for the seventh straight day to trade this morning at a discount to WTI as narrow as 15?/bl, hitting a fresh nearly two-year high for the fourth time this week.

Light Louisiana Sweet (LLS) at WTI Houston is trading today at its strongest premium to the Cushing, Oklahoma, benchmark since February 2016, changing hands so far today at premiums as strong as $2.90/bl and $2.50/bl, respectively.

The increases follow the release of Opec's latest Monthly Oil Market Report (MOMR) in which the group raised its 2017 global oil demand growth forecast by about 100,000 b/d to 1.37mn b/d, thanks to "better-than-expected data from OECD regions for the second quarter of 2017."

Global refiners, particularly in net-importing countries across Asia-Pacific, are turning to the Americas to replace dwindling supply from the Mideast Gulf during Opec cuts scheduled to last through March 2018. Opec chartering activity dipped 6.8pc in July to 12.3mn b/d, as a sharp decline in westbound shipments from the Middle East wiped out gains in Middle East-east and non-Middle East activity, according to the MOMR.

Colombian medium sour Vasconia, which often competes with Mars at the US Gulf coast, climbed more than $1/bl this week to reach a discount to November Ice Brent of at least $1.60/bl during spot trading activity for September loaders.

WTI Midland has traded at discounts to the Cushing, Oklahoma, benchmark between 35?/bl and 20?/bl so far today, a sharp increase compared to yesterday's range of reported trade at discounts between 60?/bl and 45?/bl and the strongest level at which WTI Midland has been reported trading since 19 May.

In a push to diversify feedstock sourcing, South Korea's largest refiner SK Innovation has become the latest Asia-Pacific buyer to turn to US crude, with it due to take delivery of 1mn bl of WTI Midland at its Ulsan refining complex in mid-October.