Record high temperatures in December have left the UK with the highest stocks of oil for five years as Europe-bound fuel tankers are forced into mid-Atlantic U-turns.
An unseasonably balmy period means the UK is on track for the warmest December in more than 100 years, and stocks of oil and gas are piling up as households turn down the heating.
Oil stocks in the UK have risen to almost 15m tonnes, which is 9pc above the same stage last year, according to the latest figures released by the Department for Energy and Climate Change.
Sales of fuel oil, which is used to fire boilers, slumped by more than 40pc during the third quarter ending in September, according to DECC figures.
Turning it down: no need for the heating thus far this winter Photo: ALAMY
The slump in demand comes as the European market is being swamped by production from refineries in the US, Russia, Asia and the Middle East.
The mild weather is causing havoc for the oil industry across Europe. Oversupply is presenting oil refineries with such slim margins that fuel tankers bringing supplies from the US are doing mid-Atlantic U-turns, according to Reuters.
The oil industry uses what it calls crack spreads - or the profit on the sale of refined profucts versus their crude price - to calculate what fuels are worth. In every single December since at least 2006, heating oil, or gasoil as it’s also known, has carried a strong premium during winter, according to data compiled by Bloomberg from ICE Futures Europe and PVM Oil Associates. This year, that gap has narrowed sharply.
Gasoil’s premium to Brent crude slumped to $6.54 a barrel on December 14, its lowest since February 2010, as the lack of cold weather in Europe drove a rise in stockpiles.
The glut of oil comes as Brent crude crashed to the lowest level since 2004 yesterday with the price of oil due for delivery in February down 53 cents from its closing price last Friday, to close at $36.35 on the London exchange.
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