Crude tankers store 50 million barrels of oil - IEA
Companies and traders are storing as many as 50 million barrels of oil on tankers globally to take advantage of higher future prices, the International Energy Agency said. Between 40 million and 50 million barrels of oil were in "short-term storage" on tankers at the beginning of February, predominantly in the U.S. Gulf Coast and North Sea, the agency said in its monthly oil report yesterday.
Since at least November, companies including Royal Dutch Shell Plc and BP Plc have kept crude on vessels to profit from the so-called contango, a market where buyers pay more for delivery later in the year than they do yesterday.
While traders have sold some of the oil after the incentive to store waned, some crude is likely to remain in floating storage until OPEC production cuts or strengthening demand reduces near-term supplies, the IEA said.
The IEA estimates that 15 million barrels of oil remain stored on vessels in the North Sea, as many as 25 million barrels in the U.S. Gulf Coast and smaller quantities in the Mediterranean and West Africa. Frontline Ltd., the largest owner of supertankers, said last month companies were storing as many as 80 million barrels at sea.
Charter Transfers
BP Plc yesterday sold a cargo of North Sea Forties crude that was stored since December on a supertanker in Scotland's Orkney Islands to Vitol Group.
The Eagle Vienna has been anchored at Scapa Flow in the Orkney Islands since Dec. 14 after loading Forties crude at Hound Point in Scotland, tracking data show. Shell sold 1.8 million barrels of North Sea crude from storage to Vitol last month.
"It remains unclear to what degree owners are sending barrels onshore or merely transferring offshore charters to other parties," the IEA said. A "circular pattern," whereby the sale of oil from storage causes prompt supplies to rise, is suppressing near-term prices and creating the incentive store again, the agency said.
This "will likely persist until the effects of OPEC production cuts or rising demand tighten prompt markets," the IEA said. "Floating storage should keep a ceiling over near-term prices."
Since at least November, companies including Royal Dutch Shell Plc and BP Plc have kept crude on vessels to profit from the so-called contango, a market where buyers pay more for delivery later in the year than they do yesterday.
While traders have sold some of the oil after the incentive to store waned, some crude is likely to remain in floating storage until OPEC production cuts or strengthening demand reduces near-term supplies, the IEA said.
The IEA estimates that 15 million barrels of oil remain stored on vessels in the North Sea, as many as 25 million barrels in the U.S. Gulf Coast and smaller quantities in the Mediterranean and West Africa. Frontline Ltd., the largest owner of supertankers, said last month companies were storing as many as 80 million barrels at sea.
Charter Transfers
BP Plc yesterday sold a cargo of North Sea Forties crude that was stored since December on a supertanker in Scotland's Orkney Islands to Vitol Group.
The Eagle Vienna has been anchored at Scapa Flow in the Orkney Islands since Dec. 14 after loading Forties crude at Hound Point in Scotland, tracking data show. Shell sold 1.8 million barrels of North Sea crude from storage to Vitol last month.
"It remains unclear to what degree owners are sending barrels onshore or merely transferring offshore charters to other parties," the IEA said. A "circular pattern," whereby the sale of oil from storage causes prompt supplies to rise, is suppressing near-term prices and creating the incentive store again, the agency said.
This "will likely persist until the effects of OPEC production cuts or rising demand tighten prompt markets," the IEA said. "Floating storage should keep a ceiling over near-term prices."