North Sea crude in floating storage almost clear

The quantity of North Sea crude floating on stationary tankers has dropped sharply in the past week as the economics of storing oil further weakens.

Just 5.4mn bl of North Sea crude is now on board stationary tankers in the region, down from around 14mn bl a week ago and more than 22mn bl in early June.

The draining of North Sea floating storage has been driven by the rise in the price of prompt-loading crude relative to contracts delivering further out — which has made selling crude to refiners more attractive than storing it. North Sea Dated — which reflects the price of North Sea crude loading in the coming month — recently climbed above the front-month August Ice Brent contract for the first time since early March. In early April, North Sea Dated was priced as much as $10/bl below the front-month Ice Brent contract.

The clearing of the region's floating storage stocks has been helped by recovering demand in Europe as Covid-19 lockdown measures ease and by continued North Sea flows to Asia-Pacific.

The 2mn bl Miltiadis Junior has departed the region with a combination of Ekofisk and Brent crude on board. It is headed to Las Palmas in the Canary Islands but is likely to continue from there to a destination in Asia-Pacific. The 2mn bl C. Spirit is again on the move, having remained stationary in the North Sea since loading with Forties on 22 May. The tanker is signalling Morocco as its destination but will probably continue on to Asia.

Even when North Sea crude arrives in Asia-Pacific, it may not necessarily unload immediately. The 2mn bl Bunga Kasturi Enam loaded its Forties cargo at Hound Point in Scotland on 11 April and headed for China. But rather than unload at Rizhao, it has been floating nearby since 12 June.

By Michael Carolan