U.S. Secretary of State Antony…
The world’s top LNG buyers…
Supertanker rates are surging again, for a second time this month, as a growing global glut is making more traders and companies look to charter carriers to store oil at sea and sell at a later date to profit from the market structure, shipbrokers tell Reuters.
In addition, the Saudi pledge to start flooding the market with oil as early as this week is also driving up freight rates for very large crude carriers (VLCCs).
Earlier this month, the Saudi-Russian oil price war sent supertanker rates surging as the shipping market felt that there would be a supertanker supply crunch in the coming oil supply deluge.
The other reason for sky-high tanker rates was that traders and the trading arms of oil majors are looking to charter tankers for floating storage as the oil market structure has flipped to contango. This is the market situation in which front-month prices are lower than prices in future months, pointing to a crude oil oversupply and making storing oil for future sales profitable.
The contango has further widened in recent days as oil demand everywhere in the world flops, and traders are scrambling to secure storage at sea to profit from the current low oil prices.
The run on supertankers during the massive glut and the Saudi supply surge sent supertanker rates for the route from the Middle East to China jumping to $180,000 a day on Monday. That’s double from the $90,000 a day rate in the middle of last week, and up from the $125,000 a day rate on Friday, sources at shipbrokers told Reuters.
“Almost all the spot [tanker] deals right now have floating storage tied into them - that’s the only way to make money. You’re not going to make money trading the cargo now,” Ashok Sharma, managing director of Singapore-based shipbroker BRS Baxi, told Reuters.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.