July 25, 2012 / 5:16 PM / 5 years ago

North Sea Crude-Forties slips on weak demand, over-supply

 * Forties weakens 30 cts to to dated minus 55 cts
 * Swaps backwardation flattens at front end
 * Prompt physical over-supplied as W. African competes
 * But market likely to rise next month as Buzzard shuts
 LONDON, July 25 (Reuters) - North Sea crude oil
differentials slipped further on Wednesday, undermined by weak
demand for prompt cargoes from local refiners and competition
from incoming good quality West African crudes. 
 Jetty maintenance at Forties loading terminal Hound Point
also helped pressure the prompt market as it is preventing VLCC
loadings for destinations further afield, including exports to
South Korea, which has bought two cargoes per month this year.
 But traders said the weakness was expected to be relatively
short-lived because the Buzzard oilfield, Britain's largest, is
due to close for scheduled maintenance in September.
 "I think we have found a floor here," said one trader.
"Mercuria came in and bought a cargo yesterday and if guys like
that start buying, it usually means they see good value."
 Traders said cargoes were trading well further out. With the
Buzzard field offline, the overall quality of Forties will
improve and there will be less Forties around, he said.
 "(I would say) two weeks of weakness and then things should
take off," one trader said.
 The September/October spreads remained well bid, with market
participants expecting the price of BFOE to be set by either a
higher quality Forties, or Brent.
  
 FORTIES BFO-FOT
 * Shell sold an Aug. 7-9 Forties cargo to Gunvor at dated
Brent minus 55 cents, down from a deal on Tuesday at dated Brent
minus 25 cents. 
 * This was the lowest level for Forties since July 2,
according to Reuters data.
 
 OTHER GRADES
 * BP offered an Aug. 10-12 loading Ekofisk cargo at dated
plus $1.20, unchanged from Tuesday's offer.
 
 SWAPS
 * The backwardation at the front end of the curve flattened,
as the prompt physical market displayed signs of oversupply.  
 30-03/8 Oct +85
  6-10/8 Oct +75 
 13-17/8 Oct +79 
 20-24/8 Oct +84
 28-31/8 Oct +79 
  3-7/9  Oct +59
 DATABASE
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 (Reporting by Claire Milhench; editing by Christopher Johnson)
 
 

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