Oil tankers float for weeks Offshore UK in sign of weak demand

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Three tankers carrying North Sea Forties crude have been floating off European shores for more than two weeks without discharge, a sign of weakening demand from refineries in Europe and Asia.

All three ships that loaded the grade from May 1-12 are still at sea. Two vessels — the Jaarli and the Jatuli — are anchored off Britain’s Hound Point, the loading terminal for Forties crude, while the other tanker — Thornbury — has been sitting off Rotterdam since May 18 after spending 10 days off Hound Point.

This is the first time in more than two years that this North Sea benchmark crude is floating at sea. When oil demand is strong, tankers will normally go directly and immediately from where they collect cargoes to the refineries that turn it into fuels that end users can consume.

The rare occurrence for Forties comes at a time when the European market is oversupplied with oil, mainly due to heavy flows from the US Gulf and sluggish demand from refineries. Asia, another main buyer of the grade, isn’t interested either, partly due to ample supply of competitive grades, such as Abu Dhabi’s Murban crude, and WTI Midland from the US.

Forties was sold at about $1.15 a barrel below the price of the Dated Brent North Sea benchmark on May 21, the lowest in more than four years, according to traders monitoring a pricing window run by S&P Global Commodity Insights, better known as Platts. The differential has fallen by more than $1.50 from a month ago.

The amount of crude in floating storage might grow further next month as some Forties cargoes for June loading have yet to find buyers. A major trading house was trying to book a supertanker to move some cargoes to Asia but this may not be easy as most Asian refineries have secured enough barrels for August arrival, said traders involved in the market.

Source: Bloomberg