Dozens of tankers holding jet fuel and gasoline are at anchor in sea lanes around Europe’s main storage hubs, unable to discharge their cargoes as onshore tanks are full to capacity following the collapse in demand linked to the coronavirus crisis.Also at gCaptain, July 13:
Nearly 1 million tonnes of refined products are parked on around 30 tankers off Europe’s coast, Reuters calculations found.
According to shipping data and trade sources, tankers have dropped anchor near to the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub and across parts of the Mediterranean as their cargo owners struggle to find buyers or storage tanks.
While some vessels are expected to moor in ports soon, others could remain at sea for weeks because of a shortage of space left to be leased in onshore tanks, traders said.
“The region is overflowing with products,” one trader said on condition of anonymity.
Traders and shipping sources said there were long delays at tanker terminals in the ARA area, lifting costs for traders chartering the vessels.
“Congestion has picked up in the past few days,” a shipping source said. “(Ship chartering) deals may now be impacted.”
Low water levels along the Rhine river have added to logistical pressure on ARA storage. They mean barges can only be loaded to 50% of capacity, limiting how much they can take to storage sites along the river....MORE
Business of Shipping: What’s Happening with VLCC Storage?
Moderate production cuts announced Sunday by the world’s major crude oil producers should reduce what has been the critical need for floating storage used to warehouse excess production, and ease charter rates for storage vessels.
On Sunday, Saudi Arabia, Russia, and 21 other oil producing nations agreed to reduce production by 9.7 million barrels per day starting in May. That will be followed by smaller, scheduled production cuts running through April 2022.
One apparent goal of the planned production cuts is to better match reduced output to predicted demand, ideally minimizing the need for crude oil storage.
That immediate production cut in May should help reduce the 15 million barrels per day of surplus output that strained oil storage capacity, both afloat and ashore, during the last few months, according to experts from Marsoft Inc. of Boston last week. Marsoft evaluates ship finance risk
Marsoft analysts offered insight into the floating storage market during an April 8 webcast entitled Oil and Tanker Outlook: Key Issues and Opportunities. Marine Money hosted the webcast.
The current large surplus and resultant storage capacity squeeze is due to increased production tied to the month-long, spirited Saudi Arabia-Russia price war. It came amidst the sharp Covid-19 induced drop in usage of refined petroleum products.
Planned production cuts will likely reduce the need for floating storage provided primarily by Very Large Crude Carriers, should demand for crude oil increase.
The announcement of the production cuts come as the VLCC spot charter market has been experiencing extraordinary volatility, driven by increased demand for floating storage, Marsoft analysts said.
Oil producers and middlemen use VLCC higher-cost floating warehousing as a last alternative when cheaper land-based storage is unavailable. Afloat storage is almost twice as expensive as warehousing crude at a tank farm.
An oil owner’s storage strategy is simple. Hold distressed-priced oil and sell it later, in a stronger market, at a significant premium, including the $0.50 to $1 monthly per barrel floating storage charge.....MORE
