Demand for oil tankers has risen rapidly since the collapse in crude prices in early March. File Image / Pixabay
Any recovery in oil demand later this year is unlikely to happen before storage on land fills up, boosting demand for tankers, according to Ardmore Shipping.
Ardmore's MR tankers earned an average of $19,300/day in the first quarter, up from $17,700/day in the previous quarter, CEO Anthony Gurnee said in a call with analysts last week.
"Throughout April, the pandemic and the price war increasingly impacted the oil market, resulting in over-production, physical supply demand dislocation, record volatility in steep futures contango and rapidly depleting oil storage capacity," Gurnee said.
The company has recently made some bookings paying as much as $72,000/day.
"In spite of the OPEC+ cuts, some production declines and a modest recovery in consumption, the over production may be lower, but we believe not enough to avoid shore storage reaching max capacity in the near-term," Gurnee said.
"A demand rebound is expected some time in the third quarter of 2020 if the virus co-operates, but it's unlikely to occur before shore tanks are functionally full.
"Already, about 10% of the world's large tanker fleet is engaged in floating storage or carrying elevated levels of oil on the water, and we expect this to continue rising."