Tanker Owner Frontline Says Traders Asking for Oil-Storage at Sea Options

By Naomi Christie

(Bloomberg) — Oil merchants are asking about choices to retailer crude at sea, a growth that might assist charges for tankers to rebound from a plunge, in accordance with Frontline Ltd., an proprietor of the ships led by Norway-born billionaire John Fredriksen.

“There is a lot of people out there looking for storage options,” Robert Hvide Macleod, the chief govt officer of Frontline’s administration firm, stated on a convention name Wednesday. “It could be one of the factors that helps bring this market back up.”

Crude collapsed over the previous 12 months as OPEC nations pumped ever extra oil right into a glutted market, insisting non-member producers assist deal with the excess. The slide has created a value construction referred to as contango, the place future oil prices are increased than near-term ones. When that hole will get large enough, merchants can lock in sale costs that exceed the price of storing on ships.

There has additionally been a rising development for “forced storage” this 12 months, whereby firms are asking Frontline’s ships to attend for as many as 20 days whereas consumers are recognized for cargoes, Hvide Macleod stated. This is occurring within the Middle East and Singapore, he stated.

Daily charges to rent very massive crude carriers on the benchmark Middle East to East Asia route rose 0.5 % $24,718 a day on Wednesday, in accordance with Baltic Exchange information. That’s nonetheless is down 74 % from the height in July this 12 months. Rates will common $54,112 this 12 months, in accordance with a Bloomberg survey of delivery analysts.

Frontline is a Bermuda-based tanker firm which operates ships that transport crude and refined petroleum merchandise.

The contango in Brent crude oil futures is round $2.40 a barrel between October and January, in accordance with ICE Futures Europe information. Storage would price greater than $3 a barrel over a three-month interval, in accordance with information from E.A. Gibson Shipbrokers, offered on Tuesday.