North Sea: Potential VLCC Moves to South Korea

Wednesday, April 16, 2014

North Sea Forties crude differentials were unchanged on Wednesday in very quiet pre-Easter trade, with dealers still watching two potential VLCC shipments to Asia and the stuttering return of Libyan oil supplies.

A strong early rally in flat-price Brent futures also kept traders on the sidelines, market sources said, with the new front-month contract for June delivery rising above $110 a barrel for the first time since early March as tensions in Ukraine rose.

There were no trades in the Platts assessment window and no outstanding bids or offers, leaving Forties at dated Brent plus 15 cents.

Traders have been watching the progress of two VLCCs - the BW Utah and the Phoenix Vanguard, both of which have been in the frame for arbitrage shipments of Forties to South Korea.

The BW Utah left Hound Point on Monday bound for Rotterdam, according to traders and ship tracking data, and is now close to port. The Phoenix Vanguard is currently sailing from Rotterdam to the Fawley refinery, but is only partially loaded.

Traders said it may stop there before continuing to Hound Point, then Asia, but doubts are increasing about whether the arbitrage would work as freight rates are becoming more expensive.

From May, no VLCCs will be able to sail from Hound Point as Jetty 1 will be closed for maintenance.

A tanker has started loading crude at Libya's eastern port of Hariga for the first time in nearly nine months, after a federalist group agreed to re-open the port last week, a state oil company official said on Wednesday.

The tanker Aegean Dignity arrived on Tuesday and more tankers were on the way, according to National Oil Corp. and shipping sources. It is expected to load up to 1 million barrels of light sweet crude.

Higher exports from Libya could reduce demand for North Sea oil from refineries in the Mediterranean refiners, which are beginning to emerge from maintenance, but many ports in the east of the country remain closed.

Forties
There were no trades or outstanding bids or offers in the Platts price assessment window, traders said.

The last trade was on Tuesday when Total sold to Gunvor a for loading May 7-10 at dated Brent plus 15 cents, traders said.

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