LONDON: North Sea Forties crude differentials dropped sharply on Monday as refinery sellers slashed prices to offload unwanted barrels as turnaround season approached.
Both Petroineos and ENI were offering aggressively in the price assessment window, traders said, a reflection of upcoming refinery maintenance, the large volumes of refined products already in storage and weak underlying consumer demand.
"Refineries are going down in the region," one trader said.
Differentials were unsupported by Trafigura seeking VLCCs for further storage plays, with two more likely to load in late January and early February, traders said.
The VLCCs Alsace and V.K. Eddie are being lined up for the shipments, with loading dates of Jan. 28 and Feb. 3, according to shipping fixtures.
The Alsace is currently at anchor off the southeast coast of England, and the V.K. Eddie is sailing off the coast of northern France.
The VLCCs DHT Eagle and the Caesar have already departed Hound Point, both originally fixed for South Korea.
However, on Monday, shipping data showed that the Caesar was bound for a destination off Southwold, prompting some market speculation that it may turn into floating storage.
Other traders questioned whether floating storage still worked given rising freight rates and a narrower contango.
Output from the Buzzard oilfield accounted for 41 percent of the Forties crude stream in the week Jan. 19-25, up slightly from 40 percent in the week Jan. 12-18.
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