LONDON: North Sea Forties crude differentials stayed at a steep discount to dated Brent on Tuesday, pressured by ample supplies and a lack of new shipments to Asia.
Forties has traded at a discount to dated Brent since the start of October and weakness in the physical market is spreading to the wider market structure, steepening the contango in Brent futures.
"As collapsing crude differentials finally start weighing on crude term structures, oil market sentiment has turned back to 'max bearish' mode," analysts at Energy Aspects said in a report. "Talk of $20 oil is back."
So far, no VLCCs have been fixed to take December-loading Forties cargoes to Asia, traders said, leaving more crude looking for buyers in the Atlantic Basin.
Two VLCC fixtures appear to have failed on Monday. Only one or two VLCCs are set to make the trip with November-loading crude, trade sources said, less than initially expected.
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