Remember the great European sweet crude crunch of 2011? It is little more than a historical curiosity now. Instead an abundance of sweet crude is now weighing on prices in the Atlantic basin and facilitating arbitrage flows to Asia.
This sweet crude surplus has been misunderstood by some observers, who have struggled to reconcile the steep backwardation in Brent crude futures --suggesting tight supplies-- and Brent's relative weakness to lower quality grades, like Russian Urals.
Certainly there are factors supporting Urals, such as relatively good fuel oil cracks, a smaller-than-normal export program and weather-related delays to supplies.
These help to explain why Urals has traded so strongly relative to Brent even as other grades have weakened.
But equally the sweet crude supply and demand situation looks a lot less tight than it did a few months ago.
If that is the case the backwardation in Brent futures reflects more the overall market perception of a tightness in world crude oil supplies, not so much sweet crude.
A number of factors are at play ranging from rising Libyan oil production to plunging demand from the United States for imported sweet crude oil.
Libyan oil output has recovered much faster from the country's civil war than almost every analyst expected.
Last summer the consensus among experts polled by Reuters was that Libyan output would reach 1 million barrels per day within a year of Muammar Gaddafi's ouster.
Fast forward to today, less than four months after Gaddafi's fall, and the North African OPEC member is claiming 1.3 million bpd in output and predicting a full recovery of pre-war production levels by the summer.
Throw in more stable output from the North Sea and Azerbaijan, two problem areas that made the loss of Libyan supplies all the more painful last year, and the sweet supply picture looks a lot better.
And just as the supply situation for sweet crude has improved regional demand has plummeted.
Preliminary import data show U.S. purchases of Nigerian crude oil, for instance, falling to less than 400,000 bpd in early February, down sharply from November's 655,000 bpd as the closure of the Marcus Hook and Trainer refineries outside of Philadelphia filters into the market.
Imports from other major suppliers of light sweet crude, such as Algeria and the North Sea are similarly diminished and further declines will probably be registered once the shutdown of the Hovensa refinery in the U.S. Virgin islands is completed this month.
U.S. demand for light sweet imports has been further dented by burgeoning domestic production from tight oil and shale oil plays. Flows from these fields are displacing sweet crude imports from parts of the Gulf Coast, notably the Corpus Christi, Texas, area.
European light sweet crude demand is also likely lower, at least temporarily, due to the financial crisis at independent refiner Petroplus that has forced the closure of several of its plants.
This situation has come at a good time as Asian refiners scour the globe for alternatives to Iranian crude oil as the United States steps up sanctions against Tehran and those firms that do business with the Islamic Republic.
Already Asian refiners are taking regular arbitrage shipments of North Sea crude and now they appear poised to import record volumes from West Africa.
Indeed what is remarkable is that Asia has been able to buy so much Atlantic basin crude without triggering a sharp rally in regional sweet crude prices relative to sour grades.