Oil stocks still growing at sea as price stays low

LONDON (Reuters) – Oil companies are still building up vast floating reserves of unsold crude oil on supertankers at sea because oil for immediate delivery is much cheaper than futures prices, traders and shipping brokers said on Friday.

The stockpile, mostly on Very Large Crude Carriers (VLCCs) in the North Sea, U.S. Gulf, in the Mediterranean and off the coast of West Africa, is now so large that it probably exceeds 80 million barrels — about equivalent to a day’s global oil consumption, brokers say.

Despite the recent sale of a handful of cargoes of North Sea crude from a supertanker at Scapa Flow in Scotland’s Orkney Islands last week, the economics still make a compelling argument for buying oil now, putting it in a ship and selling it in a few months’ time, traders say.

Much of the oil is North Sea crude such as Forties and Brent, but it also includes Russian Urals crude, West African and other grades.

Reuters