Oil traders have chartered at least five supertankers in the past day with options to store oil at sea, as global stocks rise after the U.S. decided not to purchase oil for its emergency reserve, Reuters reports.
The vessels – which can each carry as much as 2M barrels of oil – were booked for storage options of at least three months to take advantage of a widening contango market structure, according to the report.
Daily tanker rates have soared to record highs of $200K/day over the past two weeks and topped $178K/day today.
Benchmark Middle East-China tanker rates reportedly jumped 43% today, and major VLCC rates also surged for routes from the Middle East to U.S. Gulf and to Singapore, as well as West Africa to China.
“Oil is going on ships at a speed never seen before” as a result of the market’s glut, Frontline (FRO +9.9%) CEO Robert Hvide Macleod tells Bloomberg. “The world is producing 20M barrels of oil too much every day,” with vessels being filled at 5x the pace of 2015, when oil market was last heavily oversupplied.
International Seaways (INSW +9.0%) CEO Lois Zabrocky has said the oversupplied market could drive as much as 100M barrels of oil into floating storage “and probably more.”