Oil Tankers are storing millions of barrels at sea

With available land sites filling up fast, oil companies have booked tankers to store as many as 9m barrels of crude oil in northwest Europe, Bloomberg reports, citing Tankers international CEO Jonathan Lee.

There are 14 to 16 Aframax-class tankers now storing crude in the region, Lee said. Standard cargoes are normally almost 600,000 barrels.

Between five and 10 ships had been chartered to hold oil near Singapore, said Tankers International. Oversupply in the oil market has led to a difference in the price of January and February Brent contracts of $1.18 a barrel, the widest since April 2015. The resulting “contango” makes it worthwhile for traders to hire ships, retain the oil in physical form, and sell it at the later, higher, price “The big question is

whether it’s contango or whether it’s a lack of physical land-based storage. It seems to be the latter at the moment”, said Lee.