By Jonathan Saul and Charles Regnier LONDON, May 7 (Reuters) – Leading tanker operator Euronav posted record high first-quarter results on Thursday and expects strong demand for oil storage at sea to continue in 2020, driving its shares up 8.5%.
The world is still struggling with an oil glut due to a drop in demand caused by the coronavirus even after top oil producing countries have cut output. The glut has prompted a scramble to find storage options on land and sea.
Hugo De Stoop, chief executive of Belgian group Euronav, said floating storage was “more likely to increase than to decrease”.
“At the moment we continue to be in a world that is oversupplied with oil and the oil has to go somewhere and the land storage is full,” he told Reuters.
Euronav’s fleet currently includes 42 very large crude carriers (VLCCs) – each of which can carry 2 million barrels of oil – as well as 25 smaller suezmax tankers which can each carry 1 million barrels. It also has two megatankers each with a maximum capacity of 3 million barrels.
De Stoop said 65 VLCCs around the world had been stationary for at least 15 days, indicating they were likely to be storing oil, with a further 38 suezmaxes also holding oil at sea.
That would indicate nearly 170 million barrels of crude were held on the water, which is a record high.
De Stoop said tankers were being parked in hubs around the world especially around the U.S. Gulf, the Middle East, Singapore and South Africa, adding that five of Euronav’s VLCCs were on contracts with storage options.
The crude market has been trading in what is known as contango, where forward prices are higher than immediate prices. This market structure encourages traders to park barrels in storage in the hopes of selling them for a profit later.
De Stoop said “the first phase” of storage interest was driven by traders looking to benefit from the contango.
“Today, the requests that we are receiving are very different – it’s not from traders, it is from people who are looking for space to store the oil that has been produced,” he said.
The company said it was too early to quantify the long-term impact of the coronavirus on its results after it reported first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $327.9 million, up from $125.3 million in the same period a year ago.
The company’s shares were up 8.5% at 1039 GMT.
KBC Securities said Euronav was well set up for a “great” second-quarter. (Editing by Emelia Sithole-Matarise and Elaine Hardcastle)
ROME (Reuters) – An Italian judge on Friday cleared three migrant sea rescue charities that had been accused of abetting irregular immigration in complicity with human traffickers, throwing out a case opened...
(Bloomberg) — The closure of one of the East Coast’s busiest ports after the collapse of Baltimore’s Francis Scott Key Bridge has so far not led to broad price increases,...
(Bloomberg) — An Iranian ship that’s been linked to Houthi attacks in the Red Sea is returning home, removing a prominent asset in the area as the Islamic Republic braces...
April 18, 2024
Total Views: 1467
Why Join the gCaptain Club?
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.