Un­sold oil stuck on tankers adds to glut

IEA says global oil stock­piles at record 3 bil­lion bar­rels

Kuwait Times - - BUSINESS -

LON­DON: As land stor­age sites world­wide reach brim­ming point due to a sup­ply glut, tens of mil­lions of bar­rels of oil are sit­ting on tankers look­ing for homes - threat­en­ing lo­gis­ti­cal paral­y­sis.

The In­ter­na­tional En­ergy Agency yes­ter­day said stored oil has hit 3 bil­lion bar­rels. Traders say the ex­cess of crude is leav­ing tankers queu­ing at ma­jor ports world­wide, length­en­ing wait­ing times to days, weeks and even months. The lack of space to un­load oil is ty­ing up the tankers needed to keep oil mov­ing, and wells run­ning. The bot­tle­necks could force oil sup­pli­ers into quick, cut-priced sales just to free space, adding more pres­sure to oil prices al­ready close to six-year lows.

The cost to hire a su­per­tanker - each ca­pa­ble of car­ry­ing 2 mil­lion bar­rels of oil - re­cently hit its high­est level since 2008 at over $100,000 a day last month and cur­rently re­mains at over $70,000 a day. “We’re alarmed,” said Eu­gene Lin­dell, se­nior crude mar­ket an­a­lyst with JBC En­ergy. “There are grow­ing in­di­ca­tors that it’s get­ting harder to digest this crude.”

FROM TEXAS TO CHINA In the US Gulf, more than 50 com­mer­cial ves­sels were an­chored out­side ports near Hous­ton at the end of last week, of which 41 were tankers. Trade sources said there were seven afra­max tankers - each ca­pa­ble of car­ry­ing up to 700,000 bar­rels of oil - sit­ting out­side Rot­ter­dam wait­ing to un­load. There was also nearly 15 mil­lion bar­rels of un­sold West African crude oil ei­ther loaded on tankers or wait­ing to be loaded in the next two weeks.

Ship­ping and port sources, point­ing to full on­shore stor­age, said up to 20 su­per­tankers were held up in Iraq’s Bas­rah ter­mi­nal, with ves­sels ex­pe­ri­enc­ing load­ing de­lays of up to 12 days.

One port source said at China’s Qing­dao port, one su­per­tanker was stuck at an­chor­age since Au­gust and an­other since last month. “There are de­lays across the board as a lot of cargo is be­ing put through the sys­tem. Port de­lays in Bas­rah and China in par­tic­u­lar but also in many other ar­eas. This is ty­ing up ca­pac­ity,” said one tanker source. Ship­ping con­sul­tants MSI said the near-term out­look for crude tankers was pos­i­tive. “Stor­age space in China and Europe is dwin­dling, lead­ing to ex­tended dis­charge times. Couple this with on­go­ing high load wait­ing times in Iraq and Turk­ish Straits de­lays and (tanker) avail­abil­ity is tight,” MSI said.

A prob­lem for oil play­ers is that tankers have not been booked on long-term char­ters. This is in con­trast to the float­ing stor­age play seen ear­lier this year, when ships were parked at sea un­til prices re­cov­ered and were then sold by oil traders for a profit.

Sources said the cur­rent build up was parked on ves­sels hired for shorter jour­neys, mean­ing oil sup­pli­ers will have to un­load soon or face more freight ex­penses.

“Those hold­ing stocks will ei­ther have to dump their car­goes at cheaper prices or pay those higher freight costs,” a trade source said. An­other added: “Each minute the clock is tick­ing, they’re los­ing money.” — Reuters

IS­LAM­ABAD: A Pak­istani ven­dor ties up a plas­tic bag for a cus­tomer at a veg­etable and fruit mar­ket in Is­lam­abad on Thurs­day. — AP

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