Oil companies and traders are storing at least 50m barrels of oil in supertankers in a clear sign of supply outstripping demand as the global economy slows.
The surge in floating storage, – enough to meet France’s oil imports for a month and the biggest since late 2001–, is likely to push the Opec oil cartel, which is due to meet on Wednesday in Oran, Algeria, to make a deeper production cut to reduce stocks. Storing oil in tankers is unusual as it is significantly more expensive than inland.
Tanker brokers Poten had a great research piece last week linking this floating storage to a big contango in forward price of crude oil. Also mentions that the vessels are chartered for 3 to 6 months at roughly $55k - $60k per day, in line with spot TCEs and the forward curve on VLCC hires.
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