London (Platts)--14Nov2012/918 am EST/1418 GMT

The price of the UK's Forties crude Tuesday saw its biggest one-day fall since January, reacting to poor refining margins in Europe and the confirmation that the Buzzard field had restarted, said traders.

It was assessed a full 68 cents/b lower on the day at Dated Brent flat. The backwardation of the Dated Brent benchmark to second-month cash BFOE (January) fell even more on the day, by $1.015/b to 25.5 cents/b.

In the Market on Close assessment process, oil major BP surprised traders by offering a Forties cargo made up of top-ups from previous cargoes -- parcels 1009 and F1011-- that will load November 27-29.

The initial offer was made at Dated Brent plus 85 cents/b but BP reduced its offer gradually to Dated Brent plus 5 cents/b, and there was still no buyer for it.

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Shell also offered November 28-30 Forties at January cash BFOE plus 55 cents/b, or around Dated Brent plus 25 cents/b, but did not find a buyer.

"BP does a good job of pulling surprises out...nobody knew about this cargo," said one trader.

"That explains the huge price fall, but I think people are going to reevaluate Forties in the light of the fall."

A second trader said: "The BP cargo is very prompt and, simply, nobody needed it."

Traders said that while overall supply remained limited by earlier production problems in the North Sea and Nigeria, refiners had also reduced their interest in Forties in the light of worsening margins.

"Margins are not good at all...Forties has nothing to do with the levels of last week," said a third trader. "The margin is more in the sweets and I really wonder if people would be interested in Forties."

The UK's largest oil field, Buzzard, will ramp up production to 197,000 b/d Wednesday, the second time it has reached that level since returning from a long maintenance period in early November, said traders.

The field was heard to have produced 115,000 b/d Tuesday.

Buzzard feeds into the Forties blend.

While the rising output gives traders increased confidence about Forties cargo loading dates, it will also lead to a more sulfurous blend, a feature that is less valuable to refiners, they said.

--Olivier Lejeune, olivier_lejeune@platts.com
--Edited by Jonathan Fox, jonathan_fox@platts.com

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