North Sea oil output to fall for third month in 2012
Thursday, 16 February 2012 | 00:00
Crude oil output from the North Sea, home of the global Brent benchmark, is set to fall in March for a third month this year
due to maintenance work and natural declines.
Supply will average 2.18 million barrels per day (bpd) in March, down 1.4 percent from 2.21 million bpd the previous month, data compiled by Reuters from loading programmes showed.
The tightness in supply has prompted a rally in the North Sea market, which helps to set global oil prices. The rally has caught out some traders who expected supply of light, sweet crude to be ample in 2012.
"I'm surprised it has been as strong as it is," said a North Sea trader. "If you look at the balances, we should have been in a substantial sweet crude surplus."
Output from the Statfjord stream in Norway and Denmark's DUC is set to decline next month. Traders say there was maintenance taking place at Statfjord, where exports are scheduled to be significantly lower.
The supply figure for March represents the third monthly decline in output of the 12 crudes, which Reuters started tracking in December.
North Sea production is in steady decline as oilfields age. Based on a smaller sample of nine crudes, the March total is down around 16 percent from the same month in 2011.
Output of the four crudes that make up the Brent benchmark is also set to fall in March.
Combined loadings of Brent, Forties, Oseberg and Ekofisk crudes are set to average 990,000 bpd, down from 1.0 million bpd in February, loading programmes show.
Of the four, Forties is the most important because it typically sets the value of dated Brent, which is used to price up to 70 percent of the world's physical cargoes and is part of the Brent futures underlying market.
Output of Forties has been reduced by oilfield glitches, delaying shipments in February and March and boosting the price structure of Brent crude.
The spread between the nearby and second-month Brent contracts was at a 53 cent premium, indicating tight supply in the near term. March Brent is expiring on Tuesday.
In late January while Forties output was stable, the spread briefly traded at a discount to the second month, reflecting a perception of adequate prompt supplies.
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