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Saturday, September 23, 2017

North Sea Traders Eye VLCCs to Asia, Libya Caps

April 15, 2014

Fawley refinery (photo courtesy Exxon Mobil)

Fawley refinery (photo courtesy Exxon Mobil)

North Sea Forties crude differentials firmed on Tuesday as traders eyed two potential VLCC shipments to Asia, though gains were capped as the first cargo of Libyan crude was set to load since a deal with rebels to reopen ports.

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. 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.

From May, no VLCCs will be able to sail from Hound Point as Jetty 1 will be closed for maintenance, so traders have only two more weeks in which to get them away.

Traders were also watching the stuttering return of supplies from Libya.

A tanker is due to load 1 million barrels of crude on Tuesday from Libya's reopened Hariga port, the National Oil Corp. said, its first export shipment since a deal to end months of closures at its main oil terminals.

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.

The May Brent futures contract was also set to expire later on Tuesday. The contango between May and June widened sharply on Tuesday to around 37 cents a barrel from near parity on Monday.

Tighter supplies due to North Sea maintenance over the summer is expected to tighten the market.

Total sold to Gunvor a cargo of Forties for loading May 7-10 at dated Brent plus 15 cents, traders said. Gunvor had bid for the same loading dates on Monday at dated Brent plus 5 cents.

The previous trade was on Monday, when Chevron sold a Forties cargo loading on May 2-4 to Shell at dated Brent plus 5 cents.

Output from the Buzzard oilfield accounted for 49 percent of the Forties crude stream in the week April 7-13. This was up from 44 percent in the week March 31-April 6, according to data on the Forties Pipeline System website.

(Reporting by David Sheppard; Editing by Mark Potter)

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