By Claire Milhench
LONDON, May 15 (Reuters) - North Sea oil output is set to fall by just over 10 percent in June from May largely due to maintenance in the Ekofisk region, which is expected to support Norway's light, sweet grades.
Output from 12 crude streams tracked by Reuters will average 1.734 million barrels per day (bpd) in June, based on the latest information from loading schedules and trading sources, down from the 1.932 million bpd in May.
A large proportion of the decline is due to a much shorter Ekofisk programme, which will load just three cargoes or 60,000 bpd in June, compared with 12 cargoes or 232,000 bpd in May. This is because of three weeks of maintenance in the Greater Ekofisk region in June.
'The tightness is being derived from the short Ekofisk, which I think was mostly expected by the market,' a trader said. 'If we strip out the Ekofisk number, the programmes are not looking that tight.'
As a result, it is grades such as Ekofisk and Oseberg that traders expect will appreciate in value in coming weeks. 'It will tighten the light, sweet market,' one said. 'I expect the Norwegian grades to improve.'
The Brent benchmark is underpinned by four crude oils - Brent itself, Forties, Oseberg and Ekofisk (BFOE).
The output of these crudes will add up to around 740,000 bpd in June, the latest loading schedules show, down from the 891,000 bpd that was originally scheduled for May, and the 948,000 bpd that will actually load.
Forties gained a cargo after the initial May loading programme was issued, taking the total to 23, as Britain's biggest oilfield Buzzard was pumping well at that time. It has since suffered an outage and 21 cargoes will load in June.
Output from the Brent stream is also expected to be lower in June as work continues on Taqa's Cormorant Alpha platform. The 10,000 bpd platform is expected to remain shut for months as repairs are carried out following a leak.
Flotta, one of the smallest North Sea streams tracked by Reuters, will load no cargoes in June. It loaded one cargo in May but this was an April cargo that had been deferred.
'They're really struggling,' one market participant said. 'Those are old platforms that feed into Flotta and they experience lots of issues. It has been particularly bad recently.'
Traders were divided over whether June's tighter supply would be offset by weaker demand, with some pointing to run cuts at European refineries, while others argued that a seasonal uptick in demand could be expected.
At least five refineries in Northwest Europe and the Mediterranean have been reducing output since the second half of April due to weak margins.
But some traders see this as a low and argue that by June, end-user demand will pick up as the summer driving season gets underway in the United States and Europe.
Another trader thought that some refineries had already laid in crude feedstock ahead of the Ekofisk shutdown, which might limit an uptick in demand.
'I hear that some refiners have prepared for the maintenance by buying in replacement grades, but overall a tighter supply will help to tighten the market if demand stays stable,' he said.
European appetite for North Sea crudes is once again driving prices now that the arbitrage to South Korea has stuttered to a halt. No VLCCs appear to have made the trip over the last month, traders said, and there are no upcoming fixtures to South Korea.
(Editing by Keiron Henderson) Keywords: NORTH SEA/OIL
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