For traders trying to decipher if Opec’s output cuts are finally tightening the oil market, the evidence may lie out at sea.
Data provided to the Financial Times show that crude oil being shipped over the oceans or stored on supertankers has dropped by as much as 16 per cent since the beginning of the year, in a signal that supplies could be dropping faster than many in the market believe.
Vortexa, an oil tracking start-up founded by BP’s former head of trading technology and a one-time JPMorgan commodity executive, says its numbers indicate Opec’s cuts with big producers like Russia have been clouded by a surge in US production that is not reflective of supplies in the rest of the world.
“Water is where the market changes first,” said Fabio Kuhn, Vortexa chief executive and co-founder, who ran BP’s trading technology programme until 2015. “We think this is some of the first evidence that supply cuts are having a major effect.”
Vortexa, which has received funding from Skype co-founder Jaan Tallinn, says its data show seaborne oil shipments on April 3 totalled 759.6m barrels of crude in transit from producers to refineries or storage farms, with an additional 52m barrels still held at sea on supertankers globally.
That is down from 899.4m barrels in seaborne transit on January 1 when 78.4m barrels was also held in floating storage. The combined total from April 3 is also down by 17 per cent from the same day a year ago, suggesting the supply drop is more than just a seasonal fall, despite many refineries carrying out maintenance in the spring months.
For the data analysis, Vortexa defined floating storage as any laden tanker stationary for seven days or more.
While seaborne shipments and storage do not capture the entirety of the 98m-barrel-a-day oil market, as it excludes pipeline flows and production that goes straight from the wellhead to refineries or on land storage, it does cover a significant percentage.
Although the supply cuts agreed last November only total 1.8m b/d, or about 2 per cent of global supplies, the producers taking part are some of the world’s biggest exporters, with the majority of their crude sent by sea. Saudi Arabia, Opec’s largest producer, ships roughly three-quarters of its near 10m b/d oil supplies by tanker.
Vortexa, which launched last week at an FT commodities conference in Lausanne, aims to compete with other tanker tracking companies such as Clipper Data and Petrologistics, as well as amateur trackers that have latched on to the availability of satellite data showing the locations of the world’s crude oil tankers.
The company’s chairman and co-founder, Etienne Amic, who ran JPMorgan’s commodity trading business in Europe before it was sold in 2014, said that by using algorithmic learning and big data the system can provide forecasts of future shipments, as well as real-time oil flows and analysis of historical movements.
At the FT conference, many senior oil trading executives argued that US crude inventories, which have risen since the start of the year as domestic production rebounds towards 9m barrels a day, were masking tightening supplies elsewhere.
US oil data are widely seen as the most timely and accurate in the industry, with the Energy Information Administration publishing weekly reports on inventories. No comparable data are available in Europe or Asia.
Oil prices have struggled to break much above $50 a barrel this year partly as rising US inventories have weighed on the market, raising doubts over the effectiveness of Opec’s cuts.
“The US is producing so much that their stocks level is still going up,” said Mr Kuhn.
“But the rest of the world is not reflective of that. The US has been disconnected because of the amount of oil that’s being produced there.”
