North Sea Forties crude differentials retreated on Monday as traders said last week's move higher on the back of tighter May supply was overdone, despite the possibility of a VLCC cargo to South Korea in late April.
Forties differentials had leapt from dated Brent minus 35 cents to dated plus 40 cents in a week, helped by a May loading programme that was down 13 percent month-on-month.
But Forties was offered lower on Monday, at parity with dated Brent, vindicating those who had argued that differentials could not be supported at higher levels. "I'm not surprised to see it back where it was," one trader said.
Another market participant highlighted the fact that the VLCC jetty at Hound Point will be closed for maintenance from May, preventing any VLCCs from loading with Forties for Asia.
"Once the arb is physically blocked, at least for VLCCs from Hound Point, the reduction in the May programme alongside maintenance is fairly modest," he said.
One VLCC may get away just ahead of the jetty closure -shipping fixtures showed the Phoenix Vanguard had been chosen by Shell for a shipment to South Korea, departing around April 24.
The ship is currently off the coast of West Africa and steaming northwards. Shell also nominated the Phoenix Vanguard for a similar shipment in March but this failed to go ahead.
Polish refiner PKN Orlen has booked an 80,000 tonne vessel for a shipment out of Sullom Voe to Gdansk, departing April 15. Sullom Voe is the terminal for Brent loadings.
FORTIES
* No cargoes traded in the Platts price assessment window.
* Vitol offered Forties loading on April 25-27 at parity with dated Brent. This was down from Shell's bid on Friday for April 20-23 Forties at dated Brent plus 35 cents, but in line with its bids for April 24-27 or April 28-May 1 Forties.
* The last trade came on Thursday at dated minus 15 cents for April 17-19 Forties.
NORTH SEA SWAPS
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(Reporting by Claire Milhench; Editing by David Evans)
