In this list

North Sea crudes robust on sturdy demand despite fall in crude futures

Commodities | Electric Power | Electricity | Energy | Nuclear | LNG | Natural Gas | Natural Gas (European) | Oil | Crude Oil | Refined Products | Fuel Oil | Gasoline | Jet Fuel | Petrochemicals | Olefins

Market Movers Europe, Jan 24-28: Commodities remain on knife edge despite reduced gas price driver

Energy | Oil | Crude Oil

Platts Crude Oil Marketwire

Energy | Oil | Petrochemicals | Olefins | Polymers | Crude Oil

Asian Refining and Petrochemicals Summit

Energy | Electric Power | Electricity

PJM seeks reserve market rehearing from FERC, proposes capacity auction schedule

Energy | Energy Transition | Oil

Fuel for Thought: Alaska officials hit the road to make the case for oil, gas investment

North Sea crudes robust on sturdy demand despite fall in crude futures


Steep backwardation on Brent forward curve amid tight fundamentals

North Sea performing better than West African, US crude markets

Stable outlook for physical crude markets as inventories stay low

The North Sea crude oil market, home to Platts Dated Brent, the world's biggest physical crude benchmark, remains supported despite a few volatile weeks for crude futures.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Buying interest for August-loading Dated Brent basket grades -- such as Brent-Ninian-Blend, Forties, Oseberg, Ekofisk and Troll -- has been robust, with very few cargoes floating unsold, trading sources said on July 26.

"The market is in a very different shape than it was a few months ago," said one Geneva-based crude oil trader. "Oil is getting placed at decent [price] and at a decent pace. There is some oil around but not that much -- one of the first times this year that this has happened."

The Dated Brent differential had fallen slightly in the past month after reaching an 18-month high of $1.385/b on June 30. But the fall in differential has coincided with a steady rise in the outright crude price over the past month, and demand for North Sea oil has been very strong in this period. The Platts Dated Brent differential was assessed at $0.725/b on July 23, S&P Global Platts data showed.

Strong backwardation

Of the Atlantic Basin crude markets, the North Sea complex has been performing the strongest.

West African crudes have been under pressure due to lackluster demand from the West, while US crudes have also not been clearing swiftly due to an uneconomical arbitrage to both Europe and the East.

This strength is reflected in the backwardation on the North Sea forward curves, amid stable fundamentals in the physical market.

The Brent contract for differences has been in a steep backwardation through much of July.

According to broker reports on July 26, the week 1 Brent CFD -- currently July 26-30 -- was trading at a $1.35/b premium to week 8 -- currently Aug. 31 to Sept. 3. This compares with a backwardation of $1.45/b assessed by Platts on June 30.

This backwardated structure has affected demand for long-haul grades, with traders expecting that differentials of both West African and US crudes will need to fall in order to attract demand away from local North Sea barrels.

As a result, demand for North Sea grades is expected to remain string for the coming week, trading sources said.

The strong demand is, in part, down to limited pressure from WTI Midland offers and volumes.

The very narrow ICE Brent-NYMEX WTI spread had also made WTI-based crudes less competitive versus their Brent-based counterparts, resulting in a decline in US crude to Europe.

But whether the support continues, as the market moves into the trading cycle for September-loading cargoes, remains to be seen, with some traders suggesting that, if the backwardation softens somewhat, West African and US crudes could return to putting downward pressure on the North Sea differentials.

However, sources also said the outlook for the physical crude market looks stable, as oil inventories continue to fall at a steady pace. Onshore and offshore oil stocks are continuing their downward trend, reflecting buyer hesitance due to steep backwardation, they added.