From ZeroHedge:
Stunning Photos Of Huge Oil Supertanker Lines Forming "World's Biggest Traffic Jam"
"It may be the world's biggest traffic jam." - Reuters
Last week we revealed what we thought was a "shocking photo" of nearly 30 oil tankers caught in a traffic jam off the Iraqi coast, an indication of just how much excess oil is currently parked offshore.
To be sure, the record offshore storage is a problem because with the front-end contango collapsing, DB warned just several weeks ago when comparing the current level of floating storage (157.3 million barrels) versus that in early February (126.6 million barrels), that there may be an additional 31 million barrels of inventory to be drawn down between now and the next inventory trough over the next several months. It calculated that "depending on the duration of drawdown (three months or six months) this could mean anywhere from 165-330 kb/d of incremental supply."
But the photo above, meant to do DB's thesis justice, was nothing in comparisons to what Reuters would reveal today.
Because as ports struggle to cope with a global oil glut, huge queues of supertankers have formed in some of the world's busiest sea lanes, where some 200 million barrels of crude lies waiting to be loaded or delivered, Reuters reports today.
The vessels, filled with oil worth around $7.5 billion at current market prices, would stretch for almost 40 km (25 miles) if formed up in one straight line.Something not quite so theoretical, and yet almost identical taking place right now, is shown in the photo below, which shows VLCC supertankers traveling between India and Southeast Asia, courtesy of Reuters.
And while the market is for now clearly ignoring the unprecedented accumulation of oil in offshore storage, a bearish indicator of just how much oil will hit markets if and when prices continue rising or when collapsing contango makes it no longer economic to hold for many it is an all too real daily existence. As Reuters reports, one captain with more than 20 years at sea said his tanker had been anchored off Qingdao in northeastern China since late March and was unlikely to dock before the end of this week, a frustrating delay of more than three weeks.
"We've stayed here a long time," he said, requesting anonymity because he is not authorized to speak to the press, but added that another kind of jam was helping to alleviate the boredom. "We have a piano, drums, crew who play guitar – they are not professional but they are coming good. We have more than 1,000 DVDs so there is no need to watch the same one 20 times."
As we first showed last week in the photo above, the worst congestion is in the Middle East, as ports struggle to cope with soaring output available for export.It's not just the Persian Gulf though: shocking sights can be seen in in Asia, where many ports have not been upgraded in time to deal with ravenous demand as consumers take advantage of cheap fuel.
"It's the worst I've seen at Qingdao," said a second tanker captain waiting to offload at the world's seventh busiest port, adding that his crew was killing time doing maintenance work.
Ralph Leszczynski, head of research at shipbroker Banchero Costa, in Singapore, said the snarl-up was "one of the worst tanker traffic jams in recent years". The cause was "a perfect storm of red-hot demand from new entrant refineries in China and port infrastructure in the Middle East and Latin America that is unable to cope", he said....MORE
