Three ship-to-ship (STS) offers of North Sea’s Forties crude were shown during the Platts Market on Close assessment process Tuesday, after two STS offers were shown Monday, despite talks of firming fundamentals.
In the MOC process Tuesday, Glencore offered two Forties cargoes of 600,000 barrels apiece to load off the Marbat VLCC at STS Scapa Flow between July 1-7 and July 8-16.
The Marbat VLCC had been reportedly fixed for a voyage from Hound Point to the Far East, according to shipping and trading sources. The ship was loaded at Hound Point around June 6 and was seen floating off UK coasts since then, according to cFlow, Platts trade-flow software.
Glencore was not available for comment.
Unipec also briefly offered a Forties cargo to load off the Aframax Agathonissos over July 5-15.
“I guess people who are offering STS are still struggling to sell the oil,” one trader said.
“Floating storage had built up, and the market is perkier overall so I think it’s a decent time to sell unsold cargoes as they can clear now,” another trader said.
STS occurs when a cargo of crude oil already loaded onto a ship is transferred to another vessel directly, without either of the vessels having to berth at a port.
STS operations typically take place when an overhang of oil has formed, as sellers float their barrels while trying to place them into a short.
As such, STS offers tend to appear against weaker fundamentals and are more likely to be seen when the market is pricing in a sufficiently steep contango structure to cover the costs incurred by the operation.
Sources said the economics of offering cargoes on an STS basis appeared diminished by the current viability of the arbitrage from the North Sea to the Far East.
“The physical picture is slowly improving,” a third trader said, adding, “I wouldn’t imagine this oil hangs around for long.”
European crude traders expected North Sea differentials to find support in sustained exports to Asia, together with slimmer arrivals of US crude in the coming weeks.
“At the right number there is always demand from [Asia]. We see Forties landing at competitive numbers east,” the third trader added.
The two Glencore offers in Tuesday’s MOC were left unsold at Dated Brent minus 45 cents/b and minus 35 cents/b at the London 1630 close on Tuesday, while FOB Forties barrels loading between July 5-7, changed hands at a 45 cents/b discount with Shell lifting a Litasco offer.
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Source: Platts
