Tanker rates leapt yesterday across the board with floating storage bookings soaring.
VLCCs are now earning more than $200,000 a day for the fourth time since the start of October last year. Yesterday, the TD3 was reported at WS 196.04, calculating into over $220,000 a day on a time charter equivalent basis for the route between the Middle East to China.
For the TD22 between the US Gulf to China, the Baltic Exchange reported the lump sum at over $16m, which analysts at brokerage Lorentzen & Stemoco have worked out means the cost of freight for VLCCs stands at $8 per barrel, nearing the value of the cargo carried onboard the tankers.
Suezmax earnings were up to $87,000 a day and aframax earnings were at over $58,000 a day.
The clean markets also made “huge jumps” on all trades, from LR to MR segments, Lorentzen & Stemoco stated in a note to clients this morning.
A report from Arrow Research suggested the current strong tanker environment could last two to three months, contradicting many analyst reports from last week who had suggested the bull run would come to an end by the end of April.
Arrow is predicting global commercial onshore storage will hit 100% capacity within the next four to six weeks. Along with the commercial stocks, major consumers’ Strategic Petroleum Reserves (SPR) are being filled. The US, China, Japan, South Korea and India indicated their intentions to fill up to capacity.
Demand destruction in the US was described by Arrow as “incredible”. Gasoline and jet fuel consumption plunged by 46% and 70% respectively from the end of February to April 10.
US commercial crude oil stocks are estimated to be around 534m barrels today, 24% higher than at the beginning of the year.
Bloomberg reported yesterday how tankers carrying enough crude to satisfy 20% of the world’s consumption are gathered off California’s coast. The more than 20m barrels of crude is the highest volume of crude to ever float off the west coast at one time, according to Paris-based tanker trackers Kpler SAS.
A new report from investment bank Evercore ISI suggests that floating storage could grow to cover one third of the entire tanker fleet capacity as producers work out what to do with cheap oil.