The amount of oil held in tankers at sea has halved from its April 2009 peak of 90 million barrels according to ship broker ICAP.Given that much of this oil was held in order to arbitrage current vs. future oil prices, a reduction in floating storage implies a tightening of the oil market.
WSJ: ICAP said there were currently 21 trading VLCCs offshore with some 43 million barrels of crude. Seven of these are expected to discharge in February and one more in March. So far, it appeared those discharged cargoes wouldn’t be replaced by new ones.
“I haven’t seen any fixtures for VLCC storage in the last two weeks,” said Simon Newman, ICAP’s senior tanker analyst. “That would imply that storage looks set to fall in the short term.”
Assuming there are no new fixtures, the amount of crude in storage could sink to 27 million barrels by March, the lowest level since the current contango play began in late 2008.