Several weeks after china was reported to be out of storage space to stock up crude oil, 2 mile long line of tankers containing crude oil heading from Iraq to US was exposed. It confirms global crude “in transit” glut is becoming enormous and is adversely affecting oil prices. The crude oil tanker backlog in Houstan reaches unprecedented 39 with a total capacity of 28.4 million barrels as the FT reports from China to the Gulf of Mexico.
The oil price crash may still have further run. More than 100m barrels of crude are being held on ships due to non availability of storage on land. The storage issue is raking up the traders to ask the ships to go slow and it has given rise to some strange occurings off the coast near Galveston Tx/
FT compilled the data from satellite tracking the industry sources and it reports; ”amount of oil at sea is double than earlier and is equivalent to more than a day of global oil supply.”
Asia’s main oil hub of crude is stored on 14 VLCCs.
Petromatrix analyst Olivier Jakob stated –“A lot of storage off Singapore’s fuel oil used in shipping and power generation”. China is on course to overtake US as the world’s largest crude importer with 10 m barrels of oil parked near the ports of Qingdao, Dalian and Tianjin.
In Europe, smaller tankers are delayed at Rotterdam and in North sea. In the Mediterranean a VLCC is parked off since September. Crude inventories on the US gulf coast are at record levels.
8 m barrelsof oil is held at UAE and Iran is awaiting the end of sanctions to ramp up exports with 40 m barrels of fuel on fleets near strait of Homruz.
Unlike the last oil price collapse during the financial crisis only half of the oil is being stored by the traders to in cash till prices recover. High storage rates have prevented more stocking up of oil.
Floating storage is possible where future prices are higher than spot prices and this widening oil market structure is termed as contago.
JCB Energy, a consultancy advocated that in many regions onshore oil stocking is nearing capacity, arguing oil prices to fall allowing more to be stored profitably at sea.
David Welch, MD of JCB Energy said- “ onshore storage is at historically high levels globally though still not full”.
Patrick Rodgers, CE of Euronav, the world’s largesr tanker companies stated-“ The ships are asked to relatively slow down the speedsand the owners of the oil are in no hurry to get their cargoes”
AP reports, there is something unusual going on off coast of Galveston with about 39 crude tankers with combined capacity of 28.4 million bbls are waiting.
According o Houston pilots, an organization that assists in navigation of ships, more than 50 commercial vessels were anchored outside ports in the Houston area last week.