LONDON: North Sea Forties crude differentials held unchanged at two-month lows on Monday, after pockets of higher bids were offset by weaker offers and a rising surplus of oil weighed on the swaps market.
With at least two major European refineries set for maintenance and refining margins under pressure, one trader said there was evidence emerging of excess crude.
BP will close its 105,500 barrel per day (bpd) in Spain for roughly a month of maintenance work, while Shell will conduct partial maintance at its 404,000-bpd Pernis facility, Europe's largest, in October and November.
Reflecting the expectation of rising near-term supply, the North Sea swaps market has retraced from its steepest backwardation in over three years just two weeks ago, leaving one-week contracts for difference at a premium of just 23 cents to those trading for delivery in six weeks, compared with a premium of over $1.00 at the end of September.
However, October may well turn out to be a decent month in terms of flows to ASia, which should theoretically, help support the front weeks.
Three VLCCs (Arion, Olympic Leopard and Zourva) have all loaded at Hound Point in the last three weeks or so and have set sail for either South Korea or China.
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