SINGAPORE: The Asia-Pacific spot crude market was supported by limited arbitrage inflows and robust demand on Tuesday.
But a widening futures contango has prompted some traders to request to lease vessels for storage, as large-scale storage at sea looks to become profitable for the first time since the financial crisis more than five years ago, industry sources said.
The economics for storing crude at sea have mostly remained unfavorable, but the spread between Brent first and second months has widened to around 80 cents a barrel, from around 20 cents last week.
Brent for February delivery is close to $3.95 cheaper than for delivery five months later, the widest gap since 2010.
JBC Energy expects 30-60 million barrels of oil to be stored offshore worldwide in the first six months of 2015.
Traders said Vietnam's PV Oil had sold Ruby crude for February-loading in a tender to Shell at a slightly higher premium than last month, but the details could not be confirmed.
Brent-Dubai Exchange of Futures for Swaps (EFS), or Brent's premium to Dubai swaps, narrowed 2 cents to $1.84 a barrel.
TENDERS
Russia's Rosneft offered five cargoes of ESPO crude in a tender that closes Dec. 25 with bids valid until Dec. 29. The five cargoes will load Feb. 10-13, Feb 12-15, Feb. 17-20, Feb. 21-24 and Feb. 26-Mar. 1.
MARKET NEWS
Iraq's Kurdish region will continue to export its own crude oil under an initial deal with Baghdad until a comprehensive deal is reached, with work on a final agreement expected to start within weeks, Iraqi oil minister Adel Abdel Mehdi said on Monday.
The ambitions of Kremlin-controlled oil champion Rosneft to boost its global reach have been reined in by U.S. authorities, which torpedoed its acquisition of a Morgan Stanley oil trading business.
Plunging oil prices will prompt energy companies to cut investments in new projects by 25 percent or more in 2015, analysts said over the past week, as firms try to stay cash-flow positive and keep debt in check.
Fighting between Libya's competing governments has spread to a third oil port, curbing gas exports to Italy and cutting crude production to less than needed to cover the North African country's own domestic requirements, officials said.
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