Oil Sitting in Tankers
Traders waiting for oil (NYSE:USO), (NYSE:USL) to rise in price are storing it offshore in tankers, get ready to cash in.
June 8 (Bloomberg) -- Oil companies are storing crude on at least seven supertankers off the coast of the U.K., enough to supply the country for more than a week, even as higher prices reduce the incentive to put more oil into storage.
Seven Very Large Crude Carriers, containing as much as 14 million barrels of North Sea crude, are anchored off Britain, according to AISLive tracking data and the median estimate of six oil traders surveyed by Bloomberg. The U.K. consumed about 1.6 million barrels of oil a day in 2008, according to government data.
Oil’s 30 percent rally since the beginning of May has prompted speculation that traders who have been storing crude at sea would start selling the oil for a profit. A tanker hired by ConocoPhillips, which had been holding North Sea Ekofisk at Scapa Flow in Scotland’s Orkney Islands since Feb. 14, sailed for Chile last week. Total SA last month sold at least 1.8 million barrels of Forties oil it had been storing off the U.K.
While the amount of crude stored on tankers may be declining, “it is still a weak market” and a drop in prompt prices “could trigger additional floating storage,” said Alexander Poegl, an analyst at JBC Energy GmbH in Vienna. The consultant estimates that as many as 90 million barrels of oil may still be stored on tankers worldwide.