LONDON: North Sea crude oil differentials eased on Thursday, as a flurry of offers of December-loading Forties cargoes met with no buyers and trading sources said prices were falling enough to lure unsold crude back into storage.
Only one cargo of Ekofisk changed hands in the window, as Vitol sold to BP, while Glencore offered a number of Forties cargoes but found no buyers.
Once again, Glencore offered a cargo of Forties for loading via ship-to-ship transfer at Scapa Flow in early December from the VLCC Nave Neutrino, which is off the northwest coast of Spain and scheduled to head to Rotterdam.
Offers for cargoes through ship-to-ship transfer can be a sign of an oversupplied market, where a holder of physical barrels has failed to find a buyer for the entire cargo.
The North Sea swaps curve has shifted back into contango, as pressure has risen on prices of prompt-loading barrels ahead of an increase in supply next month and in light of slowing flows to Asia.
One shipping source said there was no evidence as yet of any ships being booked for floating storage, but with the dated Brent market back in contango, this would likely be the case in the coming few weeks.
Another trader said the dated market can often see a narrowing of a backwardation, or even a flip into contango as any players left holding physical inventory seek to cut the cost of owning it over the holiday period and into January, when refinery demand tends to be lower due to maintenance.
Looking at the dated Brent swaps market, the discount of rates for physical cargoes of oil delivered in one week to those delivered in six weeks has widened to around 13 cents, compared with a backwardation of nearly 70 cents just two weeks ago.
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