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A 12-million-barrel glut of North Sea oil is about to be partially slimmed down thanks to new tanker bookings bound for Asia. According to Bloomberg, about half a million barrels a day could leave the crowded North Sea over an 11-day period, providing some near-term breathing space for oil traders and producers.
Tanker bookings were made by Shell and trading firm Mercuria Energy Group, both for superlarge vessels that can load up to two million barrels of crude. Statoil, Bloomberg said, had also booked a tanker, provisionally, to be loaded by December 5.
The North Sea became a floating storage hub for crude oil earlier this year, as space on land ran out and demand consistently failed to keep up with production. As the Financial Times reported at the end of July, there were 14 million barrels of oil stored off the UK shore, an amount equal to over two weeks of the country’s total production of crude.
This fact weighed on Brent prices much more palpably than EIA’s weekly reports affect West Texas Intermediate, and less than a month later, the 14 million barrels in excess supply were trimmed down some, thanks to the discount price and to the renewed demand from local refineries, where an earlier strike had aggravated the storage situation.
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At that time, there was renewed interest from Asian buyers, just like today, who were eager to take advantage of the low Brent prices.
China has been the focus of attention when it comes to Asian oil markets, as it is the world’s second-largest consumer of the commodity. Ever since prices plunged to multi-year lows, China has been filling its strategic crude reserves, keeping analysts and observers guessing how much oil it had accumulated.
Back in June, Bloomberg suggested that the fun may be over, and China’s storages were full, but judging by the latest news from the North Sea, it may well have some more tanks to fill.
In December, North Sea fields are expected to produce 2.1 million barrels of oil to be loaded on tankers, some for export and some for storage.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.