June 06, 2024 10:39 GMT
OIL: North Sea Oil on Water to Highest Since Jan 2022 Amid Muted Demand
OIL
North Sea oil floating on-water has risen to the highest volume since Jan 2022 with at least 2.6mbbls of Forties and Gullfaks in floating storage in Europe, according to Vortexa data cited by Reuters.
- Gunvor and TotalEnergies have stored North Sea crude in at least four tankers in the past month as a sign of weak refinery demand.
- Muted consumption has combined with ample supply and higher inventory levels to weigh on physical oil markets in recent weeks. Forties fell to a $1.05/bbl discount to dated Brent on June 5, from a 0.55/bbl at the end of April, according to LSEG.
- North Sea barrels are competing with robust supply of light non-OPEC grades for example from the U.S.
- "This is more about weak short-term demand, rather than market structure driving floating storage," Armen Azizian at Vortexa said.
- For the increase in floating storage to be driven by the term structure the contango would need to be at least $0.6/bbl or maybe as much as $2-3/bbl to be profitable. The six-week short-term Brent swap forward curve contango was around $0.56/bbl on Wednesday, according to Reuters.
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