Global oil-in-transit to rise 30-mil bbl by Dec: Oil Movements

Singapore (Platts)--18Nov2005

While US commercial crude stocks were drawn down sharply in September
amid the US Atlantic hurricane season, less noticed has been a sharp build of
oil-in-transit stocks so far during the fourth quarter, according to Roy
Mason, who tracks global crude oil tanker activity for Oil Movements.

     Global oil-in-transit is set to climb to around 500-mil bbl by the
beginning of December. That would be some 6% or 30-mil bbl higher than only
two months prior, Mason wrote in a note to clients Thursday. 

     Moreover, that implied change in stocks at sea is "big enough to cover
most of the expected global supply deficit." About two-thirds of the
additional barrels at sea are destined for ports west of Suez, "and the build
in offshore oil in the west has more or less happened at the same time as the
southerly drift in crude prices," Mason wrote.

     Rising oil in transit has also likely supported long haul freight rates,
according to Mason. After a period of relative stagnation, VLCC rates
(AG-east) have recently climbed above Worldscale 200. Nevertheless, rates
remain only about two-thirds of the peak reached in 2004. Moreover, this
year's seasonal rise in freight rates has occurred despite plenty of new
tanker capacity coming onto the market.

      Oil Movements is a weekly newsletter that tracks global sea-borne oil
flows based on visible tanker activity.

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