The physical North Sea market is strengthening against the paper market, reaching a six-week high on Friday and bid higher Monday, as the return of some refineries from maintenance adds to crude demand, while less output than expected is being seen from Libya, sources said Monday.
Dated Brent minus the Frontline swap rose to $0.29/b Friday, its highest since March 17, Platts data showed.
The Dated Brent to Frontline Swap, which measures the relative strength of paper and physical North Sea crude, strengthened further this week in a stronger North Sea market.
The May DFL swap was seen trading at plus 15 cents Monday afternoon compared to plus 5 cents on Friday.
In Europe, "refinery appetite is going to have a small bump higher," said one trader Monday. "Possibly the Gulf Coast refineries will send a lot of products into the European continent, giving them less incentive to run as high as they'd want to. [But] overall, we still have a small window of opportunity (to the upside)."
Traders gave a range of dates for the end of the bulk of European maintenance, through mid-April into May.
"[European maintenance] peaks around mid-May. After that incrementally they'll come back, some will go on to June."
On the supply side, some of the bullishness on prompt structure came from the Buzzard field maintenance that emerged last week, said traders, and is expected to end in the next few days.
Buzzard, the UK's biggest offshore oil field, is a major component of Forties Blend, which is the most actively seen of the four crude grades going into the Dated Brent benchmark.
Less Libyan crude exports than expected by this time has also caused some traders to revise upwards their calculation of the balance of sweet crudes in Europe.