Asia/Pacific News
Singapore: Uptick in Floating Storage
Regional oil hub Singapore has seen an increase in ships being used to store oil suggesting oil market stagnation is taking hold as coronavirus fears eat into global commodity demand, according to commodity pricing agency S&P Global Platts.
"We've seen floating storage built in the Malaysia-Singapore area, about 5.86 million barrels added in the first week of February," Refinitiv oil analyst Emma Li was quoted as saying by the agency.
Floating storage in Chinese waters was not economical as queuing vessels are subject to demurrage, Li added.
Kpler oil shipping analyst Samah Ahmed said there has been an increase in floating storage for crude oil around the Malacca Straits and Singapore since the onset of the virus.
Floating storage in the anchorages around Malaysia and Singapore rose steadily from 5.133 million barrels on January 21, to 17.636 million barrels on February 3, a more than threefold increase in less than two weeks, Kpler's data showed. This remained at around 12.759 million barrels last week.
Several weeks of a contango structure in crude oil markets, which allow traders to make a financial gain from holding onto cargoes until prices rise, and a collapse in tanker rates has favored floating storage economics amid disrupted Chinese demand, the Platts report said.
