Colonial outage spurs US Gulf floating storage interest

US Gulf coast clean tanker charterers are booking medium range (MR) tankers with floating storage options following the 7 May outage of the Colonial Pipeline system.

The rise in floating storage inquiries comes because US Gulf coast refiners who typically transport their product through the Colonial pipeline into the southeastern and northeastern US need other outlets.

PBF Energy booked the Crimson Pearl MR tanker today for a voyage out of the US Gulf coast with a floating storage option at $30,000/d. Motiva, Phillips 66 and Valero each sought an MR tanker for a voyage out of the US Gulf coast with a floating storage option as well.

The Colonial Pipeline outage has also spurred increased Europe-US Atlantic coast product shipment demand, which has tightened available MR tonnage supply and supported Atlantic-basin clean tanker rates. Consequently, US Gulf coast MR rates have surged to the highest levels since August 2020.

Valero booked the Nave Titan MR tanker for a US Gulf coast-Europe voyage from 10 May at WS125, according to shipbrokers, the highest on a $/t basis since August 2020 and 43pc higher than where Argus assessed the rate on 7 May.

The Colonial pipeline's operator said it expects to restore service by the end of this week.

By Michael Connolly