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Trafigura plans to send another 2 VLCCs of Forties to South Korea
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LONDON, Jan 26 (Reuters) - Oil trader Trafigura is planning to take another two VLCCs of North Sea Forties crude to South Korea for storage, traders said on Monday, following the departure of the VLCCs DHT Eagle and Caesar from Hound Point earlier in January.
Traders said Trafigura had fixed the VLCCs Alsace and the V.K. Eddie, expected to load around Jan. 28 and Feb. 3.
Shipping data showed the Alsace was currently at anchor off the southeast coast of England, whilst the V.K. Eddie is sailing off the coast of northern France.
Like the DHT Eagle and the Caesar, the tankers are expected to head for South Korea's Yeosu storage hub with a total of 4.2 million barrels of Forties. "They have storage in Korea so they are taking advantage of the structure," one trader said.
A glut of oil in the Atlantic Basin has triggered a fall in prices of more than 50 percent since last June, so traders have been putting oil into storage in the hope of selling it at a higher price at a later date.
The steep contango in the Brent futures market means that crude for delivery now is cheaper than that for future delivery. On Monday, the front month March futures contract was trading at a $1.22 a barrel discount to April, and April was at a $1.24 a barrel discount to May.
The depth and durability of this contango has allowed traders to book VLCCs for floating storage as well as using land-based tank farms. About 20 tankers have been booked to store an estimated 40 million barrels of oil at sea, according to a Reuters tally.
Forties is one of the four North Sea crude oils that set the price of dated Brent, the crude benchmark used to price oil around the world, and the removal of large volumes of Forties from Europe would normally support the North Sea market and Brent futures.
However, ample supplies mean Forties is currently valued at a discount to dated Brent of about 38 cents, whilst Brent futures are trading at around $48.43 a barrel. (Reporting by Claire Milhench; editing by Susan Thomas and David Evans)
