LONDON (Dow Jones)–Weak demand for North Sea Forties crude due to refinery maintenance season and the availability of cheaper alternatives have prevented Forties prices from jumping despite a shutdown of Total SA (TOT)’s Elgin field, which contributes to the Forties stream, traders said Tuesday.
Total said Monday it has shut down all production from Elgin as well as the neighboring Franklin field after a gas leak Sunday.
The fields were producing about 60,000 barrels a day of Forties crude, the main component of global benchmark Brent, or 14% of Forties daily output originally scheduled for April, traders said.
Production issues at Forties fields have led to higher prices of the oil grade in the past, with the rise often filtering through into Brent futures.
But Elgin isn’t the largest Forties field, and it will take about 10 days of a shutdown to have one standard 600,000-barrel cargo dropped from the loading program, which isn’t a big deal when demand is low, one North Sea trader said.
In the price-setting late-afternoon trade Monday there was no buying interest for Forties cargoes.
“I’m not seeing much excitement now either,” a second trader said, referring to Tuesday’s morning activity.
Participants await news from Total on how long production is expected to stay shut.
Total said earlier Monday it could take “a couple of weeks” under a best-case scenario to end the gas leak at Elgin.
“Normally these issues get resolved, so traders probably are cautious of getting too bulled up,” the first trader said.
-By Konstantin Rozhnov, Dow Jones Newswires