Shell sells floating storage oil as contango eases

LONDON (Reuters) – The trading arm of Royal Dutch Shell (RDSa.L) has sold its first cargo of North Sea crude oil from floating storage, unwinding a trade that has involved up to 80 million barrels over the last two months.

In a move that is likely to be followed by other oil traders, Shell sold 600,000 barrels of Forties FOT-E crude to independent oil trader Vitol on Monday in a ship-to-ship transfer from a supertanker at Scapa Flow in Scotland’s Orkney Islands booked for Feb. 14-16, the company said in a statement.


Shell is taking advantage of a sharp narrowing of the discount between prices for prompt crude and forward oil futures, called a contango, that has dominated the oil market since the middle of last year.

Analysts said other oil traders were likely to follow suit, off-loading supply into an oil market that has rallied in recent days on winter demand for heating fuel and which has been tightened by cuts in supply by members of the Organization of the Petroleum Exporting Countries.

If much of the oil appears on the market it could have a dramatic impact on prices, analysts and traders said.

Reuters