Asian buyers are snapping up October supplies of Forties crude oil, according to LSEG and Kpler data and three trading sources, driving prices for the North Sea grade to their highest in 14 months.

China is driving the resurgence in Asian demand as buyers look to replenish stocks and take advantage of higher refining margins, the trading sources said.

“Over the course of September, oil stocks in the country drew by 22 million barrels, though inventories have seen a rebound in October so far,” lead crude analyst at Kpler Viktor Katona said.

The demand pushed the UK’s Forties crude grade price to dated Brent plus $2.15 per barrel on Oct. 6., its highest since August 2022.

Wariness of the potential for higher oil prices, as well as the higher refining margins, could have incentivised China’s crude stocking, the trading sources said.

Crude throughputs among China’s state-owned refiners rose to almost 90% in September according to consultancy JLC, a two-year high.

As many as 4-5 million barrels of Forties will be shipped to Asia in October, according to LSEG and Kpler data and the three trading sources.

The entire month’s loading plan was scheduled at 5.6 million barrels. Flows of Forties to Asia totalled 8 million barrels in the first nine months of the year.

The movement of large volumes of Forties out of northwest Europe could help to prop up the UK’s Brent market, as Forties is one of the largest North Sea grades underpinning the Brent benchmark.

Trades for October loading cargoes were likely done last month, when Brent-benchmarked crudes were more economical compared with those priced against Dubai futures, such as regional staple Murban.

Higher export demand could have helped to clear Forties out of Europe, where refining margins for light crudes are under pressure — gasoline and naphtha crack spreads against dated Brent hit 10 and 12-month lows respectively in October.

China and South Korea are regular buyers of Forties when the economics are favourable.

The grade is typically preferred to other North Sea benchmark grades because the Hound Point terminal in Scotland, where Forties is exported from, can load 2 million barrel cargoes on Very Large Crude Carriers (VLCCs), unlike the terminals for other benchmark North Sea grades.

Its slightly higher sulphur content makes it a closer alternative to Murban crude from Abu Dhabi than other North Sea benchmark grades, the sources added.
Source: Reuters (Reporting by Robert Harvey in London and Muyu Xu in Singapore; Additional reporting by Alex Lawler;Editing by Elaine Hardcastle)