VLCCs booked as floating storage as rates rebound

  • Market: Crude oil
  • 03/11/20

At least four very large crude carriers (VLCC) have been booked as floating storage following the oil market's deepened contango and all for a period up to six months.

Shell booked the Sea Lion and the Sea Pearl from Shipowner Angelef, St Shipping booked the Europe from Euronav and an unnamed charterer took the Ridgebury Progress for a period charter to be used as floating storage. The average term of the deals was at five months with the average price just over $40,000/d. But more floating storage deals in the short term are less likely as the current fixing "rush" is holding strong for a second session. Spot rates are increasing with every consecutive fixture and shipowners are reluctant to commit their vessels at a period charter when spot earnings are considerably higher.

As a VLCC chartering "rush" continues for a second session, spot rates are on track to reach a five month high at today's close. Before noon fixtures from the Mideast Gulf to east Asia were reported at WS147 or $30/t levels, and the highest since the early October spike. At the time, spot earnings were estimated at around $100,000/d, with the Mideast Gulf to east Asia — depending on the discharge destination — reaching up to $127,000/d for a non-scrubber fitted vessel. The "rally" is expected to continue further during the week with Abu Dhabi's state-owned Adnoc joining in and increasing its crude output for April, introducing an extra 1mn b/d.


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