Korean Oil Buyers to Halt North Sea Price Slide

From Bloomberg

By Rupert Rowling

South Korean tax-free purchases of North Sea Forties crude are poised to stem the slide in prices as the supply of Western Europe’s most abundant oil jumps to the highest level in almost a year.

The flow of oil to the Asian nation will keep Forties at a premium to Dated Brent, the global benchmark grade, for the next two months, all but three of 10 traders and analysts surveyed this week by Bloomberg News said. The spread has dropped 55 percent since reaching an 11-month high on Jan. 9. Production in February will climb to 407,143 barrels a day, the most since March, a loading schedule obtained by Bloomberg News showed.

“It has become harder and harder to bet on the downside of North Sea grades,” Olivier Jakob, managing director at Zug, Switzerland-based Petromatrix GmbH, said Jan. 8 by phone. “As soon as the market weakens, it opens up the flow to Korea.”

North Sea crude is being exported at an unprecedented rate to South Korea after the nation signed a free-trade agreement with the European Union in 2011. Forties is the largest of the four grades that make up Dated Brent and, as the cheapest, typically acts as a price guide for producers from Russia to Saudi Arabia.

Forties loading in 10 to 25 days was 70 cents a barrel more expensive than Dated Brent yesterday, according to data compiled by Bloomberg. It was at a $1.55 premium on Jan. 9, the most since March 9, compared with an average of 16 cents last year.

For two of those questioned in the Bloomberg survey, the effect of exports to Korea will be neutral. A third, David Wech, the managing director at Vienna-based JBC Energy GmbH, said Forties may trade temporarily below Dated Brent.

Click here to read more

Add Comment

By posting your comment, you agree to abide by our Posting rules


© 2013 Energy Tribune

Scroll to top