August Pricing Analysis - North American Crude

SUMMARY

US refiners ran at 97.4% of capacity in the week to 21 August, the highest reading of 2026, on a sour pool that had lost Middle East barrels entirely and 880 thousand b/d of Canadian crude in three weeks (EIA). Light and sour crude moved in opposite directions against the same benchmark in the same month, and the differentials in this note follow from that. Mars ended August 3.51 over the Cushing benchmark having averaged 95 cents under it in July, while Canadian Sour widened 2.42 at Cushing and 2.42 at Houston against a Venezuelan flow at 2026 highs. On the light side, exports fell to 3,058 thousand b/d in the week to 7 August, the lowest since early June, in the same week crude stocks posted their largest build of the year, and Cushing rebuilt back above the 20 million barrel operational minimum it sat below all July. WTI (DSW) Cushing Cash averaged 82.66 against July's 79.44, up 4.05% and 28.99% on the year, and dispersion halved to a 4.41 CV from 9.30.

MARKET ACTIVITY

• Cold Lake volumes rose at both hubs while LLS, the month's strongest grade, traded 26,000 barrels
• SGC volume averaged 15,524 bbl per session, up 3,524 on July and 30.84% on the year. Mars was flat at 18,571 against 18,773. Poseidon Houma averaged 1,505 bbl on a series showing zero at both the open and the close, so read it as thin rather than as a decline.
• On the aggregate of the month's trades, the Canadian barrels traded more while the discount widened 2.42, Cold Lake at Houston 9,264,200 bbl (+16.5%) and at Cushing 6,918,900 (+31.4%), which is consistent with length being moved rather than accumulated. LLS went the other way, 26,000 bbl against 86,000, in the month LLS led the complex on price at +6.13%.

PRICE ACTION

• Cushing Cash averaged 4.05% above July on half the range, and every Gulf grade gained more
• WTI (DSW) Cushing Cash opened 80.34, closed 85.76, averaged 82.66 against July's 79.44 (+4.05% MoM, +28.99% YoY against Aug-25's 64.08); high 88.34 (21 Aug), low 75.22 (5 Aug), range 13.12 against 25.67 in July.
• The largest session was -4.57 on 4 August, the second trading day, and every Cushing Cash Expiry grade hit its low the next day. Weekly averages then ran 77.36, 82.45 and 86.29 before giving back to 83.90. Two weeks carried the month and the last fortnight held what they took.
• The peaks split by delivery type. The four deepwater Gulf grades, Mars, Thunder Horse, SGC and Poseidon, all topped on 20 August, along with GCSI and HLS Empire, while every pipeline WTI grade topped a session later on 21 August with the Cushing benchmark itself. These grades are all assessed as differentials to that benchmark, so the offshore barrels could only peak a session early if their differentials were at their widest on 20 August, and they were: Mars against the Cushing Cash Formula reached its August high of +4.0000 that day and East Houston against Mars its August low of -3.1100. The sour premium topped a session before the flat price did, and was already coming off when the flat price made its high.

CROSS-MARKET DYNAMICS

• Every grade gained on the Cushing Cash Formula, and Mars turned from a discount to a premium
• Start with the three Midland-quality legs. WTI ex Basin, Midland-quality crude at Cushing, held +0.3900 over WTI Midland against July's +0.5836, and WTI East Houston against WTI Midland widened to +0.3062 from +0.2682. East Houston against ex Basin narrowed 0.2316 to -0.0838, was exactly 0.0000 on both the first and last August session, and sat at or above ex Basin on 6 of 21 sessions against 3 of 22 in July. Same-quality barrels are now worth about the same at the coast as at the hub.
• WTI Midland against the Cushing Cash Formula averaged +0.6762 against July's +0.2045, which on its own would read as an export signal. It does not, because the whole complex gained on that benchmark at once: East Houston added 0.5097 against it, Midland 0.4716 and ex Basin 0.2780. Ex Basin sits at the same physical location as the benchmark and still gained on it. The common leg is the Cushing Cash Formula rather than Midland. The arithmetic closes, since 0.2780 less 0.4716 is the -0.1936 published on ex Basin against Midland, and 0.5097 less 0.4716 is the +0.0380 published on East Houston against Midland.
• The sour bid follows quality rather than delivery point. Mars against the Cushing Cash Formula moved from a July discount averaging -0.9545 to an August premium averaging +0.2229, opening -2.1000, first turning positive on 17 August and closing +3.5100. GCSI shows the same for the broad Gulf sour barrel, moving to -0.7405 from -1.4945 and closing +2.38 from a -2.57 open. It also reaches the Permian: West Texas Sour averaged +5.18% on the month against WTI Midland's +4.63%, ahead of both Gulf sour benchmarks from a different delivery point, with WTS against WTI Midland narrowing to -2.0257 from -2.3400.
• The mechanism is the import barrel. US crude imports from Saudi Arabia were zero in every week of July and 100, 9 and 165 thousand b/d in the three August report weeks, with Iraq at effectively zero (EIA). Domestic medium sour is pricing without its usual competition into refineries running at the highest rate of the year.
• LLS against HLS Empire averaged +1.1781 from +0.5709 and was below zero on 4 of 21 sessions against 8 of 22. Worth flagging because last month's note explained that inversion by the distillate crack expanding 38%. This month the crack expanded a further 10.38% and the spread repaired anyway, so that explanation does not hold for August.
• Monthly average by grade, July to August ($/bbl): LLS 80.69 to 85.63 (+6.13%); Thunder Horse 79.61 to 84.38 (+6.00%); Mars 78.48 to 82.88 (+5.60%); HLS Empire 80.12 to 84.45 (+5.42%); WTS Midland 77.30 to 81.31 (+5.18%); GCSI 77.94 to 81.92 (+5.10%); WTI East Houston 79.91 to 83.64 (+4.67%); WTI Midland 79.64 to 83.33 (+4.63%); WTI ex Basin 80.22 to 83.72 (+4.36%); WTI (DSW) Cushing Cash 79.44 to 82.66 (+4.05%); WCS Hardisty 62.69 to 64.54 (+2.95%); Canadian Sour Houston 72.21 to 72.78 (+0.79%); Canadian Sour Cushing 71.37 to 71.93 (+0.78%).

CROSS-REGIONAL DYNAMICS

• Canadian sour widened another 2.42 at both hubs and the leg between them held again
• Canadian Sour Cushing widened 2.4285 to -8.9762 and Canadian Sour Houston 2.4189 to -8.1257. Two moves within a cent of each other leave the Cushing against Houston leg unchanged at -0.8505 against -0.8409, so moving the barrel to the coast did not change the discount. The widening is in the grade rather than in the location.
• The competition is Venezuelan. US imports of Venezuelan crude ran 743, 730 and 662 thousand b/d across the three August weeks, the highest of 2026, while imports from Canada fell from 4,406 to 3,806 to 3,526 (EIA). Two heavy sour barrels are chasing the same conversion capacity, and the Venezuelan flow, which is set by policy rather than by a decline curve, gained the share. Canadian Sour Houston now sits at about 2.6 times its year-ago discount.
• Mars against Canadian Sour Houston widened to +10.0967 from +6.2695, high +15.0600 on 20 August. The medium sour and heavy sour legs moved 3.83 apart in a month.
• The widening was not a drift. Canadian Sour Cushing bottomed at -11.3500 on 24 August and Houston at -10.2500 on 25 August, and both posted their largest one-day gain of the month on 26 August, +2.0500 and +2.3800. WCS Hardisty against East Houston widened a near-identical 2.4155, though on 20 sessions and across a contract roll, so read it as corroboration rather than as a third measurement.

CURVE STRUCTURE

• The front spread narrowed as Cushing refilled, and M1-M12 widened 2.40
• The front spread narrowed while the deferred spreads widened. Cushing held 21.3 to 22.6 million barrels through the three August report weeks, back above the 20 million operational minimum it crossed on 31 July from an 18.599 low, and the barrels that rebuilt it are light barrels that did not leave: exports fell to 3,058 thousand b/d in the week to 7 August while total commercial crude built 17,423 thousand barrels, the largest weekly build of 2026, with production at 13,843 thousand b/d and rising (EIA).
• The month ends 0.89 below where July ended on M1-M12, +13.51 against +14.40, so the strip has not out-tightened July. It has recovered ground lost between the two month ends.
• Mars is the exception. Its front spread widened to +3.4600 from +1.8400 and its M1-M12 to +15.2700 from +10.5100, the only grade steeper at month end than at July's. SGC's front spread reached +4.0500, the steepest prompt in the complex. Light crude relaxed at the front; medium sour did not.
• M2-M12 on the last August session still orders by proximity to water: East Houston +12.36, ex Basin +11.98, Cushing Cash and Mars +11.81, WTI Midland +11.26, Canadian Sour Houston +10.23 and Cushing +10.21, SGC +9.62. The ordering held but the origin-to-coast gap narrowed from 1.40 to 1.10, so the coastal premium narrowed in the time structure while it held in the differentials.
• Spreads, WTI (DSW) Cushing Cash (3 Aug to 31 Aug): M1-M2 +2.44 to +1.70, change -0.74; M1-M6 +8.40 to +8.88, change +0.48; M1-M12 +11.11 to +13.51, change +2.40.

PRICE VOLATILITY

• Dispersion halved on every grade, and Mars and Canadian sour stopped moving in step
• Cushing Cash at 4.41 is its lowest since February and the monthly range halved with it, 13.12 against 25.67. Risk sized on July's dispersion is larger than August's warrants.
• The more useful number sits underneath. In July the two sour grades a Gulf refiner substitutes between carried almost the same dispersion, Mars 12.03 against Canadian Sour Houston 10.88, a ratio of 1.11. In August they are 6.52 against 3.77, a ratio of 1.73. A sour book sized on those two legs moving together does not match August, and the headline halving does not show it.
• The lower dispersion sits on an unchanged supply situation. Transits through the strait are still running at a small fraction of normal. What changed in August is the frequency of repricing rather than the flow itself, and the 4.41 holds only while that stays the case.

SOMETHING TO WATCH

• The Gulf sour premium, which rests on an import flow rather than on demand:
  • Observation: Mars against the Cushing Cash Formula averaged +0.2229 against July's -0.9545 and closed +3.5100, GCSI closed +2.38 from a -2.57 open, and WTS ran ahead of both Gulf sour benchmarks from the Permian.
  • Why it matters: the complex is priced off Middle East sour being absent from the US barrel rather than off domestic demand. Saudi and Iraqi cargoes resuming would remove the support with nothing changing in the Gulf of Mexico, and the Mars curve is the leveraged version of the same position.
  • What to monitor: EIA weekly imports by origin for Saudi Arabia and Iraq; whether Mars holds a premium across a full month rather than only the last two weeks; the Mars front spread against the WTI front spread.
• Canadian Sour against a policy-driven Venezuelan flow:
  • Observation: the discount widened about 2.42 at Cushing and at Houston alike, the inter-hub leg was unchanged at -0.8505, and Canadian Sour Houston sits at roughly 2.6 times its year-ago discount while Venezuelan imports sit at 2026 highs.
  • Why it matters: both of August's large differential moves rest on flows that can reverse on a decision rather than on a decline curve. Location does not fix the Canadian barrel while the competing flow is there, which is what the flat inter-hub leg already indicates.
  • What to monitor: EIA weekly imports from Venezuela and Canada; the Canadian Sour Cushing against Houston leg, which stays flat while the story is grade and moves if it becomes logistics.
• The two coastal outlets from Midland, which moved by very different amounts:
  • Observation: measured from the same origin, WTI Corpus Christi against WTI Midland widened 0.2937 to +0.6919 while WTI East Houston against WTI Midland widened 0.0380 to +0.3062. East Houston therefore lost 0.2557 to Corpus over the month, going from -0.1300 in July to -0.3857 in August. The two legs move in the same shape, both bottoming on 25 August at +0.4700 and +0.1200 and both closing at their August highs on 31 August at +0.9100 and +0.4600, so this is Corpus being bid harder rather than either series being erratic.
  • Why it matters: East Houston is the leg this desk reads for export demand, and it gained almost nothing on the origin this month while Corpus gained close to eight times as much. An export read taken off East Houston alone would have pointed at the wrong outlet.
  • What to monitor: East Houston and Corpus Christi against WTI Midland side by side on the same key; the East Houston minus Corpus leg, currently -0.4500 at the close; weekly EIA crude exports, which ran 3,058, 4,066 and 3,792 thousand b/d in August.

Note: All figures, prices and market activity referenced in this report are based on the period covered by this monthly update.

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