A vital hub of the physical oil market is showing signs of softening—the first such pull-back since prices spiked after Russia’s invasion of Ukraine. 

On Monday a cargo of Brent Blend oil traded at a premium of 90 cents a barrel to Dated Brent in a pricing window organized by S&P Global Commodity Insights. Two weeks earlier, a trader was looking to purchase the same grade at $5.55 above Dated Brent, without finding any willing sellers.

North Sea oil was in high demand after the late February attack as refiners sought replacement flows for Russia’s Urals oil. For now the pull on the North Sea’s light, low-sulfur barrels has cooled, a shift that matters because those supplies underpin the benchmark that sets the bulk of the world’s crude prices.

Consultant JBC Energy GmbH said the drop in flows from Russia has so far been “less pronounced than anticipated,” one factor driving weakness in the Atlantic Basin region, which includes the North Sea.

China’s flare-up in Covid-19 cases is threatening demand, while the pledge of an oil reserve release has also taken some of the heat out of prompt crude markets. JBC said it expects regional strength to return soon though, with European oil refineries coming out of seasonal maintenance and as buyers increasingly turn their backs on Russia. 

The pullback is also showing up in oil swaps. So-called contracts for difference—swaps that help price North Sea oil from one week to the next—have weakened significantly in recent days. They were trading in backwardation, a bullish market structure, of a little more than a dollar on Monday, compared with almost $6 two weeks ago. So-called Dated-to-Frontline, or monthly swaps, show a similar trend.