Storing Crude at Sea Becomes a Profitable Option for Traders
03.23.2020 By Ricardo Perez - NEWS

March 23, 2020 [World Oil – Published March 19, 2020] – The latest collapse in oil prices has put in play a lucrative trade to store crude at sea, reviving memories of the 2008-09 recession when millions of barrels were kept on the world’s oceans.

Brent crude in May 2021 is now trading at about $14 a barrel more than it is in May of this year. That constitutes a premium of $28 million over a year for a standard supertanker cargo holding 2 million barrels. A trader can profit from floating storage by selling cargoes in the future, provided the premium they’ll fetch for it would exceed the cost of hiring a tanker. Several of the world’s largest trading houses said the trade is now profitable.
Near-term oil prices tumbled below $25 a barrel on Wednesday after Saudi Arabia made further comments about supplying huge amounts of crude into a market where demand has been ravaged by the coronavirus. That deepened immediate discounts, increasing the attractiveness of floating storage. A surge in freight costs also appears to have abated for the time being, further helping the storage trade, one shipbroker said.
Based on current daily charter rates, a supertanker would cost anywhere between $18 million and $25 million to hire for 12 months, depending on the quality of the vessel, according to estimates from shipbrokers. Traders also have to pay financing costs although those aren’t generally thought to be prohibitive.

While longer-term storage plays look profitable, a surge in freight rates in recent weeks means that shorter durations are less clear-cut. Those may depend on the type of ship being booked, a shipbroker said.


Click Here to Access Today a 4,900 Tank Terminal Database With a Pro Trial
Click on the button and register to get instant access to actionable tank storage industry data

Everfuel Eyes up to 2 GW of Green Hydrogen Production in Denmark
06.14.2024 - NEWS
June 14, 2024 [Offshore Energy]- Danish green hydrogen company Everfuel has submitted a project p... Read More
Nutrien Unveils Plan for World's Largest Clean Ammonia Facility
06.14.2024 - NEWS
June 14, 2024 [Chem Analyst]- Nutrien Ltd. disclosed its evaluation of Geismar, LA as the potenti... Read More
South Korea’s Kogas Boosts Gas Sales in May
06.14.2024 - NEWS
June 14, 2024 [LNG Prime]- South Korean LNG importer Kogas boosted its gas sales year-on-year in ... Read More
Neogen Releases CelluSmart Technology for Biofuel Industry
06.14.2024 - NEWS
June 14, 2024 [Biofuels International]- Neogen, an innovative leader in food safety solutions, ha... Read More