Floating storage is in less demand than it has been. Is the supply glut over and what will this mean for West Texas Intermediate (WTI) prices? The reduction in storage needs points to stabilization in the WTI market. Are we on an upswing?
Although stockpiling of oil on the ground is far from exhausted, the cost of storage at sea has risen, making it no longer profitable to use this type of alternative when storing excess oil.
It is because the price of rental and storage on these ships has increased substantially due to high demand for crude oil, the daily rate on the route from Japan to Saudi Arabia increased according to data from the London Stock Exchange to 66.64 dollars,
This means an increase of 30% compared to the previous month. According to Bloomberg and Gibson Shipbrokers LTD, an oil company would lose about 7.6 million dollars if they wanted to protect for six months at sea in a ship two million barrels.
The WTI basket is increasing its monetary value since US oil production is finally falling and threatening to fall to less than 9 million bpd for the first time since November 2014, which makes the oil market no longer so flooded with that commodity.
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