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Crude oil stored on tankers idling in the North Sea has shrunk from 12 million barrels two weeks ago to just 6.6 million barrels, Paris-based energy data provider Kpler reports, adding that the tankers are shipping the crude to Asia.
There are now two fully loaded Very Large Crude Carriers (VLCC) at the Southwold hub on the British coast, and two VLCC that are partially loaded. Also, loadings at the Hound Point terminal since the start of August have declined, Kpler notes, helping the stockpiles draw. So far this month, one VLCC and three Aframax tankers have been loaded at the port, compared with four VLCCs and three Aframaxes in July. The August loadings are the lowest year-to-date.
Global floating oil storage is also shrinking. In late July, Kpler reported that the 30-day average as of July 27th had fallen to 71.2 million barrels, from some 100+ million barrels in June. The build, which had been consistent since the start of the year, had dampened any hopes that OPEC’s and Russia’s cuts will work. These latest figures, however, suggest that the market may finally be beginning to return to a more balanced state.
Oil markets remain excessively volatile despite these early signs of a possible rebalancing. The latest tailwind for oil was Hurricane Harvey, which is forecast to hit the Texas coast later today, prompting platform operators in the Gulf to evacuate personnel and refineries to brace for possibly serious damage.
While initially the news of Harvey pulled prices up, yesterday WTI closed with a 2-percent drop, to US$47.43 a barrel on the back of worries that damages caused by the hurricane would affect oil demand from Gulf refineries as they shutdown operations in anticipation of the storm. These worries apparently trumped, at least yesterday, the more usual bullish reaction related to the possibility of production disruptions. WTI is trading up .51% as of 11:04am EST on Friday as the hurricane draws nearer.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.