Stable oil prices have crunched the profits of physical energy traders, who warned on Thursday that US and European refineries would face supply constraints unless Saudi Arabia and Iraq send them more crude. Physical traders are tuned into global energy trends because they make their money by buying oil from areas in surplus and shipping it to places with shortages. Totsa Total Oil Trading Managing Director Pierre Barbe said North Sea and Latin American crude production would decrease in the next five years, making Western refiners more reliant on supplies from the Mideast and West Africa. Saudi Arabia and Iraq in particular could be important potential suppliers for refineries in Europe and the US Gulf coast, Barbe said, also forecasting Russian crude production would increasingly be sent to emerging Asia. “Demand for refined products will only increase slowly at best ... I don't see how in this context refining margins will remain supported,” he told a trading conference, stressing gains in some corners including Canada and Venezuela would not fully offset declines in North Sea and Mexico oil production. “We hope that the Middle East will consider sending more product to the West, especially to Europe, because we need it,” the Totsa executive said. “Eventually refiners will have to pay a premium for that crude.” Oil prices fell nearly 2 percent on Thursday, sliding for a third day, as US Midwest supply anxieties eased further on news that a major Canadian pipeline carrying crude to the region would be back in service Friday. US benchmark crude futures for October delivery settled down $1.45 at $74.57 a barrel, after earlier dropping to a session low of $74.11. ICE Brent crude for November delivery settled down 94 cents at $74.48 a barrel, lowering its premium over the US benchmark crude to $2.74.
