The EIA confirmed a large build in US crude stocks at 5.7 mil bbls to put stocks at 538.1 million bbls, a historic record excluding US strategic reserves. This was caused largely by the shipments from Saudi Arabia from the price war pumping in March and April. We knew from the effects on the Tanker FFA market, the industry was using floating storage to combat oversupply, so it should come as no surprise that the time has come for them to discharge onshore. With demand increasing as economies restart, these floating stocks have been sold and moved to delivery. Those that bought crude at the rock bottom levels during the price war will now be looking at a nice profit after several weeks of floating storage.
Uneven Asian Recovery
China has seen a rapid recovery in its demand for oil products. It’s import of crude are at record numbers, and its levels of consumption are already back at pre-pandemic levels. Yet if you look at other parts of Asia things have not recovered back to pre-crisis levels yet. Japanese gasoline demand is still down 27% in May, South Korean oil throughput is still down 5-10%, and Indian sales of diesel were down a third in may compared to last year.
Fujairah Full and the North Sea Emptying
Stocks of fuel have reached 17.168 mil bbls on Monday, up from 16.1 mil bbls a week earlier, putting it at record highs. Exports had dropped to 18-month lows in May, which won’t be helping the situation of oversupply of product.
The North Sea, on the other hand, has seen a significant drop in the number of vessels anchored around the UK, France and the Netherlands. Millions of barrels of oil were being stored on tankers in the area, reaching some 12 mil bbls at the end of May. New data now shows that this has dropped by 35%. This has been caused, in part, by the need of delivery of oil, and the push to cut deliveries to northwest Europe from other oil producing nations. This was done to lift the Brent benchmark and eliminate the ‘super contango’ which made it highly lucrative to store oil in the region.