Nine tankers carrying as much as nine million barrels of crude are floating in the North Sea as traders can’t afford to sell the crude they have—at least not profitably enough.
In May, there were seven million barrels of oil stored in tankers in the North Sea.
Bloomberg reports, citing the International Energy Agency, that worldwide crude oil amounts at sea had reached 95 million barrels at the end of June, the highest since the global financial recession in 2008.
However, during the 2008-2009 rise in crude oil storage at sea, traders were holding off the sales to make bigger profits – crude then was in triple-digit territory, hitting US$140 a barrel in 2008. Now they can’t afford to sell it, as prices are down once again, following API’s estimate that U.S. stockpiles have risen by 2.2 million barrels in the week to July 8. Even official figures from the EIA did not reverse the trend, even though they were for a draw of 2.5 million barrels.
So, it seems that regardless of what Saudi Arabia’s new Oil Minister recently said about the excess supply having disappeared and the market close to balance, the situation is pretty much the same as it was a month ago in terms of supply. While the IEA concurs that excess is diminishing, this is not the same as “glut over”.
In its latest report, the agency said global supplies of crude rose in June, by 600,000 barrels per day to 96 million bpd. Production, on the other hand, was 750,000 bpd lower than last June, with OPEC pumping more, but not enough to offset the decline in the U.S. The IEA also noted that there was healthy demand for crude in Europe and that this demand supported global growth of 1.4 million bpd, which should continue through the end of the year.
By Irina Slav for Oilprice.com
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