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BFOE slump piques interest in arbitrage of Forties, Ekofisk crude oil grades: traders

London — The sharp sell-off in the BFOE complex over the past two weeks has opened up arbitrage across grades and routes, traders said Wednesday.

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Plummeting differentials for Forties and Ekofisk in particular were piquing the interest of longer haul buyers, despite a recent uptick in freight rates on most routes.

Forties has shed $1.095/b on a differential basis since September 23, while the light-sour Persian Gulf complex has picked up, opening arbitrage opportunities to China and South Korea.

"Forties to South Korea looks open to us and I believe some business has been done there," a trader said Wednesday.

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There was talk among North Sea traders that a South Korean buyer had secured Forties for delivery in the new year, a few said.

"It looks like South Koreans might pick up some Forties...economics for the Forties arbitrage to Asia is the most workable it's been in over a month," a second trader said.

ADNOC raised its official selling price for September-loading Murban Wednesday to a $2.17/b premium to same-month Dubai, an increase of 12 cents/b from the previous month. The cost of shipping Murban to South Korea on 2 million barrel-sized VLCC tankers was assessed at $8.13/mt, a little over a $1/b.

Meanwhile, the Brent/Dubai December EFS was trading around $2.83/b at 1100 GMT, while Forties loading in the last decade of October was worth around Dubai plus 60 cents/b. Freight from Hound Point to Asia is currently indicated around $4.15 million, or $2.07/b.

The volume of FOB-loaded October or November Forties destined for Asia was as yet unclear however, with some oil floating aboard vessels in the North Sea potentially for STS on to VLCCs for Asia voyages.

Nonetheless a further October VLCC fixture is expected.

Meanwhile, a steep decline in differentials for light-ends rich Ekofisk -- which had already seen a record volume fixed for exports over September and October -- simultaneous to better trading in light-sweet Mediterranean grades, was driving interest from refiners in that region, traders said.

"We might be seeing some Ekofisk going to the Mediterranean. We've seen it work at higher differentials and light sweets in the Mediterranean haven't come off in the way Ekofisk has [over the last couple of weeks]," a third trader said.

The deep discounts at which recent Ekofisk offers had been shown in Platts Market on Close assessment process could also see the grade move westwards to the US Atlantic Coast.

"Ekofisk is open into the Mediterranean potentially, and potentially open to the East Coast US," the first trader said.

--Erduan Reid, erduan.reid@spglobal.com
--Edited by Jonathan Loades-Carter, jonathan.carter@spglobal.com