LONDON (Dow Jones)--Between 15-20 oil tankers are being used to store oil products off the coasts of the U.K. and the oil hub of Amsterdam, Rotterdam and Antwerp, shipping brokers based in London said Thursday.
The ships being used as floating storage are thought to be carrying gasoil and jet fuel and are part of a growing trend in the oil industry - encouraged by low demand and cheap tanker rates - to store crude and oil products at sea.
The types of vessels being used for floating storage are thought to be Long Range 1, or LR1, and LR2 product tankers, which can carry about 60,000 and 80,000 metric tons of oil products respectively, a shipping broker said. A steep contango price structure for gasoil futures - where near-term futures contracts trade at a discount to those months in the future - has also raised demand for floating storage, a shipping broker in London said.
Anemic oil demand, which has reduced price volatility, means traders are having a hard time making deals for prompt barrels, the broker said. Vitol Holding BV, Mercuria and Royal Dutch Shell PLC (RDSA) are believed to have booked clean tankers for floating storage, he said. At least eight of the ships used for offshore storage are thought to be anchored off the coast of Devon, England, at Lyme Bay.
An unprecedented number of 10 large vessels have anchored off Lyme bay in recent days, eight of which are thought to be holding cargoes of crude or oil product, Kevin Mowat a Harbour Master at neighboring Torbay said.
No ship-to-ship transfers of crude or oil products have taken place between the anchored vessels in question, he added.
Freight rates for the type of clean tankers being used as storage are between $15,000 to $18,000 a day, the shipping broker added.
The increased bookings of clean tankers has done little to alleviate low tanker rates, due to low demand for oil products and ample supply of vessels, the shipping broker said.
Rates for oil tankers in general are about 50% lower compared to levels last year, the broker added.
source: online.wsj.com
