Lloyd’s list: Crude tankers Win Time Charters as Market Focuses on Floating Storage

“US broker and consultancy Poten & Partners elaborated on this in a recent note. ‘What is likely to happen is that oil companies with barrels on the water might exercise floating storage clauses (which are common in many charter parties) or simply sit the vessel and incur demurrage,’ it said.” “Behind the possibility of increasing floating storage is oil price movement. The Brent oil price curve has moved into contango, which means the spot price is lower than the future price. The driver of the contango ‘is the sense that the market feels well supplied today (spot), but that it could be undersupplied in the future (forward); hence, the higher relative price,’ explained Poten.” “As well as tankers used for storage, tankers will be used to move crude between floating storage vessels within certain regions. ‘The longer-term knock-on result could be renewed employment for suezmaxes and aframaxes shuttling crude oil around the Atlantic,’ said Poten.” “More vessels being used as floating storage will reduce the number of ships competing against each other in the freight market. ‘If more ships are in storage, key markets, like the Arabian Gulf, could experience shortened tonnage availability in the coming months,’ added Poten.”