Oil traders drain Caribbean hoards as OPEC impact hits

Bloomberg

During the oil price rout, islands in the Caribbean were exhibit A for the longest-lasting glut in three decades, with millions of barrels stored there. Now, that oil is flowing again, a sign the market is rebalancing. Since mid-February, between 10 million and 20 million barrels have left the Caribbean, according to estimates from traders who asked not to be named because their data is proprietary. The draw, hardly noticed by most in the market, reflects the impact of the output cuts orchestrated by OPEC and Russia.
Low taxes and the Caribbean’s proximity to US and Latin America oil centers have made it into one of the world’s largest oil storage centers, holding as much as 140 million barrels. While a lack of official data can make the area invisible to some, the information is key in framing a full picture of global supply and demand at a time of market uncertainty.
“Caribbean and other storage has drawn down rapidly over the past weeks,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd., in a note to clients. “The first indications that the rebalancing has begun are here.” On Sunday, Mohammad Barkindo, OPEC’s Secretary-General, said he remained “cautiously optimistic” the gap between supply and demand was starting to tighten. The Organization of Petroleum Exporting Countries and the 11 countries that agreed to trim production in the first half of the year are now weighing whether to extend the cutbacks to the end of 2017.
West Texas Intermediate oil fell 0.7 percent to $50.24 a barrel in New York on Monday. Oil prices have fallen about 10 percent this year as crude stockpiles in the US have since December grown by almost 55 million barrels to 534 million barrels, the highest since 1929.
Grand Bahama, Aruba, Bonaire, Curaçao, St. Eustatius and St. Lucia, mostly known for the beaches that draw sun-chasing visitors from around the world, all have significant depots to store crude and refined products.