Yahoo finance:
Clarksons Platou estimates that, were it not for floating storage, the hit to tanker demand from the output cuts would slash the tanker fleet’s utilization rates by 21 percentage points to 79%, and that day rates would tumble to levels of about $9,000 -- roughly what supertankers need to cover their running costs.
However, the continued overproduction of oil and traders’ consequent need to keep storing barrels on ships will see that utilization rate at about 90% by late June -- a level that’s still very high by historical standards and will support day rates as high as $75,000 a day, according to Morkedal.
Oil on Water
Frontline Ltd. boss Robert Hvide Macleod says ships will keep storing and the amount of oil on the water -- up 18% this year by his reckoning -- will keep on rising even when the output cuts do start to result in fewer cargoes.
“Oil on water is steadily increasing,” he said. “This is likely to continue as the world produces far more oil than the world consumes, which has a positive effect on tanker rates. Simply put, we expect the oil on water increase to outpace supply cuts. Oil-on-water statistics captures storage, congestion, slow steaming and we find it a very good indicator.”
Earnings for very large crude tankers, known as VLCCs, on the benchmark route from the Middle East to China have been been at high levels since early March because of a battle for market share among major crude producers at a time when demand was being crushed by Covid-19.
They peaked this year at $250,000 a day on March 16, but even rates of $100,000 are very high by historical standards.
“We believe the steep contango in Brent crude prices will continue due to Covid-19 demand destruction, which will further support floating storage demand and tanker rates,” said Randy Giveans, senior vice president for equity research at Jefferies LLC in Houston.