Highest Tanker Shipping Rates in Six-Years
Morgan Stanley and Evercore Partners Inc. predicting the highest shipping rates in six-years are possible with demand to store oil on vessels is strengthening, says a Bloomberg report.
Supertanker owners from Tokyo to Athens days that oil-at-sea storage demand has gone up. Frontline Ltd., Nippon Yusen Kaisha and Dynacom Tankers Management Ltd., who control 11 percent of the fleet, said orders are multiplying as the global oil glut expands.
Brent crude plunged 60 percent since June. The report says that the price of oil for delivery at later dates is so far above current costs, a market structure known as contango, that it can be profitable to store cargoes and lock in returns now in the futures market.
This situation would tighten the market and would make the entire market move higher, noted Fotis Giannakoulis, an analyst at Morgan Stanley.
Tankers shipping Middle East oil to Japan, a benchmark route, earned $83,853 a day yesterday, according to prices from the Baltic Exchange in London. If more and more ships are used for storage and taken out of the trading fleet then it can go up to $100,000 a day.