Floating oil storage capacity on the rise

Abundant oil supplies in a decreasing market and dropping tanker freight rates have combined to form an increase in floating storage, said the International Energy Agency in its monthly oil market report. Tanker operator Frontline Ltd. said 20-25 oil supertankers, representing 50 million bbl of oil storage capacity have been hired for floating storage in recent weeks.

Jens Martin Jensen, acting managing director and chief executive of Frontline, said very large crude carriers (VLCCs) have been booked within the last 2 months to store oil for future delivery.
Jensen said the increased activity in tanker markets is due to the oil market’s contango structure that gives producers an incentive to store crude in order to capture higher returns in the future.
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