Floating storage 'critical for tankers'.
The amount of oil held on vessels at sea will remain a critical factor for the tanker market this year amid soft energy demand and rising ship supply, leading ship broker E A Gibson said yesterday. Last year a price play taking advantage of prompt oil that was cheaper than further forward prices had encouraged traders to store cargoes at sea with a view to selling them later at higher prices, helping to soak up available vessels.
But the contango on the oil futures market has narrowed in recent weeks, making it less attractive to hold stocks in floating storage.
Gibson"s head of research Steve Christy said floating storage had acted as a ?huge cushion? for the tanker market.
?What happens this year is going to be very much dependent on where this goes? Christy told a shipping conference, referring to the impact of sea storage on tankers.
Figures presented by Gibson showed 112 vessels were storing crude oil and clean products globally by February 9, down from a high of 149 ships at the end of November.
Christy said two thirds of the volume was concentrated in clean oil products, with a third of stocks held in crude oil.
Gibson estimated that average earnings for VLCCs on the benchmark Middle East-Japan route could drop to the ?low $20,000? a day level this year without storage or tanker cancellations and could reach around $35,000 a day with sustained storage and ship cancellations. Earnings averaged around $29,000 a day last year.
Earnings on the route were over $34,000 a day this week, Baltic Exchange data showed on Monday.
Gibson estimated the number of scheduled vessel deliveries this year was expected to rise to 455 ships from 404 last year, 339 in 2008 and 290 in 2007 when the tanker market saw a boom.
Energy consultants Poten & Partners said in a report on February 12 around 57mn barrels of clean products were being stored at sea, down from around 80mn barrels in December.