RPT-With big outages in oil supply, buyers tap plentiful storage

(Repeats story published earlier, no changes to headline or
text)
By Libby George and Catherine Ngai
NEW YORK, May 19 (Reuters) - Oil traders from Houston to the
North Sea are tapping into plentiful storage onshore and
offshore, evincing little sign of concern yet about mammoth
supply losses from Canada to Nigeria that has knocked out about
2 million barrels a day of output.
Ample oil inventories near record highs on ships and land
have left buyers in no hurry to lock down new crude supply. Many
have even shunned offers of fresh cargo. Traders said there was
an overhang of physical oil in Nigeria, with more than 20 June
loading cargoes available. In Angola, there were nearly 10
June-loading cargoes.
"There is simply so much crude on the market," said Eugene
Lindell, oil analyst with JBC Energy, adding that buyers "are
quite wary simply because there is so much stock available."
Analysts had expected that by now, the Canadian wildfire
shutting some 1 million bpd in capacity would dent supply. But
stocks at the Cushing, Oklahoma, hub still hit a record this
week, even though U.S. Midwest oil stocks drew for two weeks
running as refiners tapped into storage.
Total U.S. crude inventories are near their peak, up 61
million barrels from a year ago, according to the U.S. Energy
Information Administration. Crude stocks in Europe have tested
capacity, and there are some 44 million barrels of oil floating
off Singapore.
The overhang stems from two years of production that
exceeded demand to the tune of more than 1.5 million bpd. All
that extra oil flowed into tanks worldwide, and even onto ships
offshore.
"There are huge extra exports from Iran and absolutely
unprecedented stocks," another trader said. "We need to eat
through floating storage before the market can really be tight."
As a result, many buyers have tapped storage, rather than
new loadings. ClipperData said some 10 million barrels of oil
that was floating off the U.S. Gulf Coast had drawn down over
the week after the start of the Canadian wildfires, and traders
said more was expected to go.
In Europe, oil floating in the North Sea had whittled down
to 5 million barrels last week from around 7 million two weeks
ago, while a Total-offered supertanker of North Sea Forties
crude failed to find a buyer by mid-week, according to trade
sources. Light grade Saharan Blend in the Mediterranean actually
saw differentials to dated Brent fall.
In West Africa, some 800,000 bpd were knocked offline over
the past week by militants and an accident at an ExxonMobil
pipeline. Still, at least 15 million barrels were available for
export, and those were trading slowly.
One trader said that while it should be a "mega-event," no
one was in a hurry to buy.
Despite the supply glut, benchmark Brent and U.S. WTI have
hit six-month highs on expectations for market tightness in the
near-future. Analysts said the futures market will need to align
with physical markets.
"We feel that markets have moved too high, too far, too
soon," BNP Paribas (PA:BNPP) said in a note. "We still face a large
inventory overhang and for the most part, the outstanding supply
outages...are reversible."