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(Bloomberg) — Key North Sea crude market indicators slid to the lowest in more than a year, indicating a darkening outlook for prices in the coming months as supplies continue to grow.
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WTI Midland, one of the six grades feeding into Dated Brent, traded at 40 cents a barrel above the global benchmark on Monday — the lowest premium since May 2024 — in the pricing window run by Platts, a unit of S&P Global Commodity Insights, according to traders.
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Meanwhile, weekly Brent crude swaps used to hedge North Sea cargoes known as contracts for difference also eased. The first-week CFD traded at 41 cents below the sixth week, the biggest bearish contango structure in over a year, according to PVM Oil Associates Ltd. data. The pattern means near-term prices are cheaper than those further out, typically reflecting ample prompt supply or weaker demand.
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Weakness in the North Sea comes as no surprise, with the oil market bracing itself for a supply glut next year. The International Energy Agency has forecast record crude oversupply, with production growth outside the Organization of the Petroleum Exporting Countries stoking the excess. OPEC and its allies decided recently to pause output hikes in the next quarter.
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There’ll be plenty of oil available in the region. Loadings of 13 main North Sea crude grades are scheduled to average about 2.1 million barrels a day in December, the highest in eight years, according to loading programs compiled by Bloomberg. Norway’s new Johan Castberg field will load a record 232,000 barrels a day.
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Vitol Group, a top independent oil trader and a key buyer over the past two months, has shifted to selling. The company sold two WTI Midland cargoes on Monday and also offered to sell Forties and Ekofisk.
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Elsewhere, cheaper crudes in the Middle East and the resumption of Kurdish crude exports are putting pressure on the prices of heavier grades, such as North Sea Johan Sverdrup. At the same time, Indian refiners — seen as potential alternative buyers after cutting Russian oil purchases — have not bought as much crude as expected, according to traders.
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—With assistance from Alex Longley.
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English (US)