Oil stored at sea provides cushion for the tanker market

The tanker market is showing signs similar to those observed during the crash of the dry bulk market a few months ago. While the dry bulk is rallying during the past week, tanker owners are witnessing rates free falling, as one more crucial OPEC meeting is nearing

Scheduled for the following Sunday (28th of May), OPEC members will decide on their future supply, with voices being raised once again for a new cut of daily oil production. Although, these voices seem to be the minority within the “cartel’s” members, needless to say that another cut could be translated in below-cost rates for tankers, just six months after the market witnessed its best rates since 2004. Over the past few months, from the beginning of the year the tonnage committed to crude oil storage amid the contango in oil pricing, was the key factor of support to the VLCC sector and to some extent the Suezmax spot markets. According to London broker Gibson, currently at least 55 tankers, 49 of which are VLCCs are storing 102 million barrels of crude oil. In addition, a further 33 vessels, mainly LR2 tankers, are storing 19 million barrels of middle distillates. Crude oil is predominantly stored in the Atlantic basin.

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