The Dated Brent price structure returned to backwardation Thursday for the first time in a month on stronger demand for crude oil from European refiners and an ongoing arbitrage window to Asia, traders said.
Dated Brent was assessed at $117.20/barrel Thursday, a $0.21/b premium to July cash BFOE, Platts data showed.
The backwardation steepened as the contract-for-difference swaps curve rose and the Forties differential turned positive to the benchmark for the first time since April 11.
Forties, the main crude stream in the North Sea, was assessed at Dated Brent plus $0.01/b, up $0.235/b on the day.
Traders said the rise was prompted by higher demand for crude from European refiners after a slack period driven by the refinery maintenance period in the northern hemisphere.
In addition, an ongoing arbitrage window to South Korea was still open, meaning crude would likely be exported from the North Sea in June, lowering the supply available to European refineries, traders said.
Glencore was heard to have fixed the Nectar VLCC from the UK's Hound Point terminal on June 5-6. The trading house was not immediately available to confirm the information.
"As we always see, North Sea cargoes clear and demand returns...you just don't see Forties stay low for very long in this low stock environment," one regular North Sea trader said.
Ekofisk cargoes loading in the first 10 days of June were heard to have been sold at close to Dated Brent plus $1/b.
"When you see North Sea grades trading up to four weeks in advance, that's the sign of a strong market," the trader said.
A total of 13 VLCCs have been sent from the UK and Norway to South Korea in December-May after a trade agreement canceled duties that previously applied. Traders said this is the largest flow of North Sea crude to the Asian country ever seen.
