LONDON: North Sea Forties crude differentials slipped on Friday as refiners offered out unwanted cargoes and an overhang of competing West African barrels continued to depress the market.
"The weight of ample competing crudes is clear in the much more realistic typical offer levels now than were seen a couple of weeks ago," one market participant said.
The refiners' appetite for crude feedstock in Europe has been muted so far this year, and some refineries are already in maintenance.
The dearth of buying is reflected in the weakness of the Exchange For Physical (EFP) spread for March. This has dipped to minus 38 cents, the lowest level since last August, when it went to minus 41 cents.
Effectively this means that traders have to pay 38 cents to a counterparty to take their physical crude cargo off their hands, in exchange for futures.
"Basically people are trying to find ways to offload physical crude and having a tough time," one trader said. Last August's EFP levels were the lowest since December 2008, and reflected the glut of unsold cargoes in the Atlantic Basin.
Supplies have continued to build, with new North Sea production coming onstream in December and January.
Platts said that it would cut the Forties de-escalator to 15 cents per barrel per 0.1 percent weight of sulphur over the 0.6 percent standard for February-loading cargoes, down from 20 cents for January.
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