Three fixtures of VLCCs for floating storage have been confirmed so far, and more could follow as contango oil market conditions and low bunker prices make storage deals more economically viable for traders.
In a report published earlier this week, Morgan Stanley said using VLCCs as floating storage would be viable again at timecharter rates of between $35,000 to $40,000/day, based on a 12-month price spread of $8/bbl for Brent crude and bunker prices of around $208/tonne.
Currently, Brent crude for delivery this month is trading at $50.55/bbl, around $7 below contracts for October 2016 delivery ($57.61/bbl) and around $8 below those for December 2016 ($58.34/bbl). Bunkers are currently trading at $247.5/tonne at Rotterdam; $250/tonne at Fujairah and $260/tonne at Singapore.
Today, brokers report that Russian oil trader Litasco has taken OSG’s Overseas Mulan (319,000 dwt, built 2002) on a one-month period charter for floating storage at a daily rate of $37,000.
The contract reportedly includes extension options for a further month of storage at $40,000/day and $42,500/day for the following month.
Trafigura Beheer is also reported to have fixed Cosco’s Cosbright Lake (299,100 dwt, built 2003) on a three-month period charter for storage at $42,500 daily.
Cosbright Lake presumably replaces the ex-dry dock DS Vada (309,600 dwt, built 1997), which Trafigura placed on subjects last week at the same rate for delivery in Singapore, but the deal failed. The vessel is owned by Germany-based Dr Peters.
Last week, Vitol reportedly took NGM Energy’s VLCC Voyager I (309,200 dwt, built 2003) on subjects for a period of 50-90 days for delivery in Yanbu, in the Red Sea.
The rates are slightly below the estimated $43,000 daily rate for a one-year timecharter, according to today’s report from London-based shipbroker Alibra Shipping. This rate is expected to fall further as a number of vessels conclude their employment and re-enter the market this month.