N Sea Crude:June Supply To Hit 2-Year Low; Impact Seen Limited
10:17 EDT Monday, May 11, 2009
LONDON -(Dow Jones)- Planned maintenance will cut total loading volumes of major North Sea crude oil to a two-year low in June, traders said Monday, although they expect little impact on spot market prices.
North Sea crude oil producers will supply a total of 37.62 million barrels of benchmark North Sea BFOE crude - Brent, Forties, Oseberg and Ekofisk crude oil - in June, down 15% from May's 44.24 million barrels, the lowest since June 2007, according to Dow Jones data.
June's volume will be equivalent to 1.25 million barrels a day, about 12% lower than May.
Including the Norwegian Statfjord and Gullfaks grades, supply of the six major North Sea grades will total 48.73 million barrels, or 1.62 million barrels a day, down 13.3% versus May.
The sharp decline in June loading volume is mainly due to planned maintenance at StatoilHydro ASA's (STL.OS) Oseberg oil field. As a result, Oseberg's June supply will fall 55% on the month to 3 million barrels.
A spokesman at StatoilHydro declined to comment on an exact downtime for the field, although the company said last month that it would be partially offline for maintenance in June.
A person familiar with the situation said the company is scheduled to shut the field between June 8-18 for maintenance. No Oseberg cargoes will be loading after June 5 until June 23, according to a copy of the June loading program seen by Dow Jones Newswires.
But less Oseberg volume may not lend much support to the market since traders pay more attention to the loading volume of the Forties Blend, the grade that typically sets the price of the benchmark BFOE basket.
"Rarely anything matters on BFOE otherthan Forties," a trader said. One less cargo of Forties is scheduled for June compared with May, with 34 standard 600, 000-barrel cargoes of Forties slated.
"Oseberg rarely sets the quote or goes in chains," said the trader.
With this in mind, most traders doubt the Forties market will tighten significantly to affect BFOE prices in coming weeks.
On May 7, Forties traded at a discount of 50 cents a barrel to Dated BFOE, compared with a parity the previous week.
Ample supply of Forties in June and July suggests that traders may continue to store extra barrels in supertankers in a bid to take advantage of the contango structure in the market. A contango structure in crude futures means near-term contracts are priced cheaper than those further into the future.
Currently, five to six very large crude carriers are employed for Forties storage in the North Sea, traders said.
However, maintenance is expected to cut Forties crude output to 365,000 barrels a day in August, down 46% from July projections, according to BP PLC ( BP), which operates the Forties Pipeline System.
Earlier this year, Canadian energy company Nexen Inc. (NXY) said that the company will conduct up to six weeks of third quarter maintenance at its 200, 000-barrel-a-day Buzzard oil field in the North Sea to coincide with maintenance on the Forties Pipeline System.
The output from the Buzzard field, the biggest in the Forties system, contributes to around a quarter of total production of Forties Blend. There are more than fifty oil fields making up Forties Blend.
North Sea Crude Oil Loading Programs
Grade June Vol B/D May Vol B/D
(Bbl) (Bbl)
Brent 3,668,000 122,267 4,240,000 136,774
Forties 20,400,000 680,000 21,000,000 677,419
Oseberg 3,000,000 100,000 6,650,000 214,516
Ekofisk 10,550,000 351,667 12,350,000 398,387
Total 37,618,000 1,253,933 44,240,000 1,427,097
Statfjord 5,130,000 171,000 5,985,000 193,065
Gullfaks 5,985,000 199,500 5,985,000 193,065
Total 48,733,000 1,624,433 56,210,000 1,813,226
-By Sherry Su, Dow Jones Newswires; +44(0)20-7842-9329; sherry.su@dowjones.com
(END) Dow Jones Newswires
05-11-09 1016ET
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