Dated Brent falls below $20/b Monday, first time since Feb 2002

London — S&P Global Platts crude benchmark Dated Brent fell below $20/b Monday for the first time since February 2002.

Dated Brent was assessed by Platts at $17.79/b Monday, down $3.31/b day on day. The last time the benchmark was assessed below $20/b was February 25, 2002, when it was assessed at $19.63/b. The benchmark was last assessed lower than Monday's level on December 13, 2001, when it was assessed at $17.55/b.

This follows the benchmark falling below $30/b on March 16, $40/b on March 9 and below $50/b on March 6. The benchmark has fallen over 65% since March 5.

Oseberg was the most competitive grade for Monday's assessment. It was assessed at a $1.95/b discount to Dated Brent Monday, down $1/b day on day.

As a result, the Dated Brent differential fell $1/b on the day to minus $3.345/b Monday, its lowest since at least May 2013, Platts Data showed.

The North Sea paper market continues to demonstrate significant pressure on the prompt with both the Cash BFOE and Brent Contracts for Difference contracts displaying significant contango structures.

June Cash BFOE was assessed by Platts at $25.70/b Monday, down over 50% since March 5 when it was assessed at $51.64/b.

The contract was assessed $3.85/b higher than the May Cash BFOE contract, representing a steep contango structure.

Brent CFDs also demonstrate a steep contango as March 30-April 3 was assessed Monday $3.39/b below April 27-May 1. This compares with March 5 when it was assessed at a 48 cents/b premium to April 27-May 1.

The value for both contracts has fallen significantly over the month. March 30-April 3 and April 27-May 1 were assessed Monday at discounts to June Cash BFOE of $6.76/b and $3.37/b, respectively, down $6.10/b and $2.23/b since March 5, demonstrating the flip into a contango and subsequent steepening of the contango.

This comes as the demand destruction as a result of the coronavirus pandemic combined with the continuation of the Saudi Arabia-Russia price war and market participants anticipating that the market will be flooded with crude by April means that bearish sentiment dominates the North Sea crude market.

"This is the worst market you will cover in your lifetime -- there is too much oil around and no demand," a trader said, adding that it was a "perfect storm" as storage becomes tight.

When the crude market first saw multiple contracts flip into a contango structure, many sellers looked towards storage as an option for dealing with the muted global demand.

Following a rush towards land storage and those options filling up quickly, some market participants looked towards floating storage. Since then however, freight rates have found significant support as a result.

"Floating storage costs just increased massively, differentials are coming off hard to try to compensate," a trader said, adding there is "nowhere to put oil."