* Shell builds large position in BFOE forward cargoes
* Crude price differentials, Brent market structure weak
* Shell's Forties sales to Asia in Jan had supported Brent
By Alex Lawler and Amanda Cooper
LONDON, Nov 17 (Reuters) - Royal Dutch Shell hassnapped up a large volume of North Sea oil that helps set theglobal Brent benchmark, trade sources said, the second time thisyear that its trading activities have attracted the glare of thespotlight.
Shell, the world's second-largest oil company, runs some ofEurope's biggest refineries, including the404,000-barrels-per-day Pernis facility, and is one of thebiggest traders in the North Sea crude market, the home of theBrent benchmark.
The price of dated Brent - the benchmark used to pricecargoes in Europe, the Middle East, Africa and parts of Asia, isset by the cheapest of four North Sea crudes - Brent, Forties,Oseberg and Ekofisk, or BFOE.
Shell, trade sources say, has acquired many of the Fortiescargoes loading in early December through the forward BFOEmarket, as well as a large amount of better-quality Ekofisk.Shell already owned a quarter of Forties cargoes loading inDecember through its equity stakes in the oilfields.
"They have a very dominant position," said a North Seatrading source at another company. "I expect at some point theyare going to sell some of this."
A Shell spokeswoman declined to comment, citing "commercialreasons". The company usually does not comment on its trading.
Despite building the position in December-loading cargoes,Shell has been one of the most aggressive sellers in the dailyPlatts trading window, offering physical barrels of Brent andForties and often not eliciting buying interest.
In the last six weeks Shell has offered crude for loadingvia ship-to-ship transfer, usually perceived by traders assignalling an oversupplied market or a seller under pressure,from at least four vessels including a very large crude carrier,or VLCC.
Storing oil on ships, rather than on land, tends to be moreexpensive and dependent on a number of moving parts, includingfreight rates and the discount, or contango, in price ofprompt-loading barrels to those for delivery in the future.
A steep contango makes floating storage more viable and thefirst-month Brent futures contract is trading at a discount ofalmost $1 a barrel to the second month
With a global surplus and North Sea supply perceived asample, the price differentials of Brent and Forties have beenunder pressure.
Shell was offering to sell Forties
HEADING TO FAR EAST?
This is the second time this year that Shell's North Seatrading position has attracted attention.
In January, Shell bought a large number of Forties cargoesand was expected to ship many of them to South Korea. Thiscoincided with the last time the first-month Brent contracttraded at a premium to the second.
It is common for any of the companies that trade North Seaoil, from trading houses such as Glencore, Vitol and Mercuria,to refiners such as Shell, PetroIneos or France's Total to build big positions in BFOE crudes, which can leadto unusual patterns in related physical and derivative markets.
Glencore bought at least a third of total June BFOEsupply.
Plentiful supply and low prices can encourage market playersto snap up cargoes cheaply to sell them at a profit at a laterdate, or ship them to Asia. In Shell's case, it has the optionto simply absorb any unsold crude into its own refining system.
"They can refine Forties, or they may have shorts into theFar East for them," another North Sea trading source said. "Timewill tell." (Additional reporting by Ron Bousso; Editing by Dale Hudson)
Glencore (GLEN)
