The shipment is the latest addition to the rising volumes of distillates stored at sea, mainly off Europe, which are estimated to hit 100 million barrels by January, and underscored the Singapore-listed commodities and energy firm’s expansion goals.
“Noble has time-chartered the Torm Mathilde for about six to eight months starting next month, using it to float gas oil off Europe,” said a shipping source.
“The vessel left Taiwan a few days ago and is now on its way to UKC.”
Trading sources said this was Noble’s first gas oil cargo to Europe.
“This is one of many firsts for Noble. It is also the company’s first move to do storage in their energy business,” said another trader.
When contacted by Reuters, Noble declined comment.
Noble, which had total revenues of around $36 billion in 2008, told Reuters in June it plans to expand into the Asian and European distillates market later this year. It was also building up storage capacities around the globe, particularly in Brazil and China.
Earlier this year, it started gasoline trading and took up clean storage tanks at Vopak’s terminal, and hired five former Trafigura traders to start physical fuel oil trading.
The global distillate market has been mired in a steep contango for many months due to poor demand from the economic downturn.
Distillates stored globally in vessels have risen rapidly in the last eight months, starting with less than 30 million barrels in April.
Noble’s fixture will see volumes rising past 100 million barrels by January when the ships arrive in Europe, where most of the storages are taking place.
Traders continue to shift abundant stockpiles from Asia into these floating vessels to take advantage of the market’s contango, on hopes that a harsh winter in the West would help draw down the glut. But are growing fears that the severe glut would persist at least until the first half of next year, as winter heating demand might not be enough to absorb the volumes.
Others still see potential gains in storing fuel in anticipation of a price and demand recovery, arguing that a sudden unwinding of cargoes is unlikely.