Oil storage space is running out. File Image / Pixabay
Limited storage capacity for oil amid oversupply and shrinking demand is leading to a narrowing of delivered bunker prices over cargoes, according to price reporting agency S&P Global Platts.
The premium for very low sulfur fuel oil (VLSFO) delivered at Rotterdam over Northwest European barge prices has narrowed to $8.94/mt on average so far this month, Platts reported Friday.
The average premium was $19.41/mt in March and $26.24/mt in February, Platts said.
A sharp contango has formed in oil prices across the barrel since last month's crude collapse, leading to refined products storage around the world running out as market participants keep oil in tanks in the hope of securing a higher price for it later in the year.