Dated Brent basket differentials diverge amid distillate strength, muted long-haul demand
26th April 2022 11:52 GMT


Differentials of the five grades in the Dated Brent basket -- Brent Blend, Forties, Oseberg, Ekofisk and Troll -- have diverged in recent weeks amid continued strength in the distillates markets.


The premium of Ekofisk over Forties was assessed by S&P Global Commodity Insights at $3.92/b April 25, down slightly from the near 14-year high of $3.97/b assessed April 21.

"Margins are extremely good in Northwest Europe, particularly due to very strong distillate cracks, so sweet grades are in strong demand," one trader said.

European middle distillates have been well supported recently, underpinned by diesel and jet tightness.

With demand for diesel stable at around pre-pandemic levels in most countries in Europe, supply side constraints are keeping prices buoyant.

At the same time, the beginning of the summer flying season has seen jet fuel demand increase while supply has also been tight on thin import flows, traders said.

Grades such as Forties, however, have come under pressure from limited demand as they do not have the same distillate cut as the other grades in the basket and have also suffered from reduced buying interest from Asia amid recent coronavirus-related lockdowns.

"Forties is more sulfurous and more of a naphtha grades -- petrochemical markets in the East particularly are struggling hence naphtha cracks are weak," the trader added.

The reduced long-haul demand has also been weighing on grades such as Forties and Johan Sverdrup that typically head to Asia each month.

Availability of Brent Blend and Forties in Northwest Europe has been evident in the Platts Market on Close assessment process.

Trafigura offered Brent Blend on a CIF Rotterdam basis across two different laycans while Glencore offered Forties on a CIF Rotterdam basis for delivery in mid-May.

Shell lifted the Trafigura Brent Blend offer at a premium to Dated Brent of 80 cents/b for delivery May 7-11 while PetroIneos lifted Glencore's offer of Forties delivered into Rotterdam between May 10-14 at a premium to Dated Brent of 40 cents/b.

The steep discounts could well mark a floor for Forties, according to another trader.

"Forties should have good local and foreign interest at these levels, but perhaps people covered early," the source said.

The Platts Dated Brent differential was assessed at minus 65 cents/b April 25, down 18.5 cents/b day on day.

Bunkerworld .,
26th April 2022 11:52 GMT