Oil storage at sea has not fallen much due to a shrinking contango in oil futures markets, Frontline, the largest oil tanker shipping company, said. Frontline acting CEO Martin Jensen told Reuters there were currently around 40 very large crude carriers storing oil offshore. Each supertanker can store around 2 million barrels. Combined, the supertankers could be storing 80 million barrels, or nearly one day's worth of global oil supplies.
Jensen last estimated on Feb. 23 that crude oil storage at sea was at least 80 million barrels.
The estimate signals that the recent rise in prices for prompt crude had yet to sharply cut the number of supertankers storing oil, as some oil and shipping analysts have suspected.
"There are still around 40 VLCCs employed on storage," Jensen said in an email from Singapore.
In recent months an oil market scenario known as contango - when oil for prompt delivery is cheaper than oil for later delivery - encouraged high levels of oil storage by trading companies.
The companies locked in profits through buying prompt oil, leasing tankers to store it, and simultaneously selling the barrels for later delivery.
The discount on April U.S. light, sweet oil futures CLc1 to barrels for delivery four months later was $4.32 on Friday. In mid-January, the per barrel price for prompt oil was more than $15 cheaper than barrels for delivery four months later.
A contango market encourages storage when the profits from holding oil are greater than the cost of storage.
Jensen last estimated on Feb. 23 that crude oil storage at sea was at least 80 million barrels.
The estimate signals that the recent rise in prices for prompt crude had yet to sharply cut the number of supertankers storing oil, as some oil and shipping analysts have suspected.
"There are still around 40 VLCCs employed on storage," Jensen said in an email from Singapore.
In recent months an oil market scenario known as contango - when oil for prompt delivery is cheaper than oil for later delivery - encouraged high levels of oil storage by trading companies.
The companies locked in profits through buying prompt oil, leasing tankers to store it, and simultaneously selling the barrels for later delivery.
The discount on April U.S. light, sweet oil futures CLc1 to barrels for delivery four months later was $4.32 on Friday. In mid-January, the per barrel price for prompt oil was more than $15 cheaper than barrels for delivery four months later.
A contango market encourages storage when the profits from holding oil are greater than the cost of storage.