VLCC sought to store crude oil

According to Bloomberg, Morgan Stanley and Citigroup are currently seeking to fix VLCCs as floating storage so as to profit by selling the crude oil at much higher prices later in the year.

Reports are coming in about players aside from traditional oil traders like Shell and Koch wanting to store crude oil on VLCCs for sale at a later date.

According to Bloomberg, Morgan Stanley and Citigroup are currently seeking to fix VLCCs as floating storage so as to profit by selling the crude oil at much higher prices later in the year.

?There's a lot of people looking for storage,? a London-based broker was quoted saying.

Traders are currently looking for some 10 VLCCs to store crude oil on top of the 25 VLCCs that have already been fixed in the past few weeks for floating storage purposes, said Jens Martin Jensen, interim CEO of Frontline's management arm last week.

Given that an average VLCC can carry up to 2 million barrels of oil, as much as 70 million barrels of crude oil could eventually be held in floating storage.

Latest reports indicate that more than 35 VLCCs have been booked to store crude and some players are estimating that up to 80 million barrels of crude are either being moved to land-based storage aboard a supertanker or already locked in floating storage.

Traders tell that storage has become attractive due to contango in the crude oil market, with near-term futures contracts cheaper than contracts further into the future.

An oil consultant had said in December that the present contango was the biggest for a 12-month span of futures since 1998.

According to statistics from Drewry Shipping Consultants, 35 VLCCs translates to about 7% of the global VLCC fleet.

Reports meanwhile are indicating that US player Koch has emerged as the largest charterer of VLCCs for crude storage, having booked at least nine VLCCs since late November.

Other players involved in booking VLCCs to store crude oil in the past weeks include Shell, BP and Vitol.

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