Oil Tankers Fill at Record Pace as Glut Overwhelms Storage - Bloomberg:
The world’s oil tankers are being filled with crude at a record pace as the options to store a glut on land rapidly diminish, one of the industry’s largest owners said.
A combination of surging production from key producers worldwide and capitulating demand in the face of the coronavirus outbreak means that land storage is being overwhelmed, said Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS. The world is likely overproducing by about 20 million barrels a day, or 20% of normal consumption, he said, echoing wider industry views.
“Oil is going on ships at a speed never seen before,” he said, noting that the tanker fleet is filling up at five times the pace of the last oil glut in 2015.
The oil market’s structure has fallen into a so-called super contango, which means it is now profitable for traders to buy oil today, store it, and reap the profits by selling it at a higher price months or even years down the line. International Seaways Inc., another owner, said on Thursday that the total volume of oil in floating storage may top 100 million barrels during this glut.
The world’s oil tankers are being filled with crude at a record pace as the options to store a glut on land rapidly diminish, one of the industry’s largest owners said.
A combination of surging production from key producers worldwide and capitulating demand in the face of the coronavirus outbreak means that land storage is being overwhelmed, said Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS. The world is likely overproducing by about 20 million barrels a day, or 20% of normal consumption, he said, echoing wider industry views.
“Oil is going on ships at a speed never seen before,” he said, noting that the tanker fleet is filling up at five times the pace of the last oil glut in 2015.
The oil market’s structure has fallen into a so-called super contango, which means it is now profitable for traders to buy oil today, store it, and reap the profits by selling it at a higher price months or even years down the line. International Seaways Inc., another owner, said on Thursday that the total volume of oil in floating storage may top 100 million barrels during this glut.
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