According to the global head of the crude oil and LNG tanker group at DVB Bank, Peter Illingworth, the number of tankers currently fixed as floating storage was large enough to make a difference if the global economy picked up.
“The storage issue is an unexploded bomb for both the crude and product tanker markets,” said Illingworth at a recent forum.
For floating crude storage, it has been estimated that some 30 VLCCs are currently being used for storage purposes alone.
For clean products (CPP), Ocean Intelligence had in September reported that the number of tankers storing CPP had already jumped some 25% over a month to 64 vessels or 51 million barrels, of which 39 were LR2s and 7 were LR1s – the global LR2 and LR1 fleets have been pegged at 213 and 300 tankers respectively.
Two weeks later, the figures rose to 40 LR2s and 30 LR1s, along with at least 20 crude carriers freshly delivered joining the party as traders fix larger tonnage for their contango plays so as to maximise margin gains from premiums earned at future prices.
On October 6, Ocean Intelligence then estimated floating storage of CPP at 60 LR2s, including freshly delivered aframax crude tankers, at least 30 LR1s and ten VLCC newbuilds and nine suezmax newbuilds with more reportedly on the way on the back of latest charters.
According to Illingworth, if either the economy recovered quickly or the northern hemisphere experienced a harsher than normal winter, the resulting spike in demand for both crude and CPP could spark-off a winter draw-down.
A Singapore-based tanker broker told Ocean Intelligence on Thursday that this would see a sudden rush of tonnage re-entering the spot markets.
“It would be a worse case scenario for tanker operators who are already fighting a losing battle finding employment for their newbuilding deliveries,” he said.