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North Sea Crude-Forties steady, draw from Asia tightens supply

Tue, 31st Jan 2017 18:11


LONDON, Jan 31 (Reuters) - North Sea Brent and Forties differentials held mostly steady on Tuesday, supported by strong demand from Asia and month-end buying.

* Traders said a combination of healthy flows to Asia plus the expiry of the ICE March Brent futures contract had encouraged enough last-minute buying of physical barrels to push the futures curve into a mild backwardation.

* The contracts-for-difference curve has also moved into backardation, after cargoes loading in one week's time traded at a premium to those loading in two weeks' time, reflecting tightness in availability of cargoes loading in early February.

* Trading sources said two February-loading Forties cargoes, parcels F0212, currently with BP, and F0218, currently with Shell, have been deferred to March, meaning next month's daily supply will amount to around 429,000 barrels per day, compared with an originally planned rate of around 471,000 bpd.

* Other measures of near-term market strength, such as exchange-for-physical rates - broadly speaking a mechanism traders use to hedge physical barrels of oil through the futures market - is also showing strength in demand for prompt loading cargoes. The front-month EFP has fallen to its lowest since early December, around 8 cents a barrel, after having held steady throughout most of January at around 10 cents.

* In flows, there are four VLCCs that have been provisionally booked to take Forties crude to Asia. If all fixtures translate into voyages, Shell, Glencore and Trafigura could together move as many as 8 million barrels of crude east next month, according to Reuters shipping data.

* This would match the volume recorded so far in January, which trading sources say is an exceptionally large amount. Helping to draw flows to Asia are cuts in output from OPEC and a narrowing premium of Brent crude to Dubai, which makes Atlantic Basin crudes cheaper for Asian buyers.

WINDOW SUMMARY

BRENT/FORTIES

* BP offered a cargo of Brent for loading Feb. 18-20 at a premium of 25 cents to the dated price.

* Shell bid for a cargo of Brent for loading Feb. 14-16 at parity with the dated price.

* Unipec offered a cargo of Forties for loading Feb. 10-15 via STS at Scapa Flow from the Alfa Britannia at a discount of 15 cents to dated Brent.

* Trafigura bid for a cargo of Forties for loading Feb. 10-19 at a premium of 5 cents to the dated benchmark.

* Litasco bid for a cargo of Forties for loading Feb. 12-20 at a discount of 5 cents to dated Brent.

* Shell bid for a cargo of Forties for loading Feb. 10-20 at parity with the dated price.

* Unipec offered a cargo of Forties for loading Feb. 13-15 at 15 cents above dated Brent.

* BP offered one cargo of Forties for loading Feb. 21-23 at 30 cents above dated Brent and a second for loading Feb. 20-22 at the same premium.

EKOFISK/OSEBERG

* Litasco bid for a cargo of Ekofisk for loading Feb. 20-25 at a discount of 5 cents to dated Brent. (Reporting by Amanda Cooper; Editing by Ruth Pitchford)



(c) Copyright Thomson Reuters 2017. Click For Restrictions - http://about.reuters.com/fulllegal.asp




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