A slowing of the economic recovery is leading to a new build-up of global oil supplies (as well as a decline in the spot price for crude). Traders are once again booking tankers to store millions of barrels of crude oil and refined fuels at sea. Traditional onshore storage remains close to capacity.
Reuters reported that trading house Trafigura had chartered at least five VLCCs citing trading sources and shipping data.
Other top traders, including Vitol, Litasco and Glencore have also in recent days booked large tankers to store diesel for up to 90 days, according to shipping data and traders.
“Freight rates are low and the inter-month Brent spreads are now probably wide enough to cover storage costs and cost of cash,” one trader selling crude oil told Reuters.
Global oil inventories remain sharply above average. They are still some 600m barrels above last year’s levels, according to Morgan Stanley. There were also signs of an erosion in demand from China.