In Euronav’s second quarter results statement ceo Hugo de Stoop said: “Floating storage requirements dissipated sooner than expected, pivoting the tanker market to a transition phase ahead of our prior forecast.”
Euronav noted that a disconnect between oil production and demand which had driven floating storage and forecasts of its continued demand was not susutained, “as OPEC+ cuts enacted on May 1 were accompanied by further additional voluntary Saudi based reductions and production shut-ins from the US shale sector.”
As a result peak demand for floating storage was around 275m barrels compared to forecasts in Q2 of three times that amount.
“A specific feature of the floating storage impact on tanker markets was, in the short term, the disproportionate quantities that the suezmax/aframax vessels took in floating storage primarily due to the freight rate differential with VLCC vessels. Therefore, when the unwind of this floating storage occurs, it may be less pronounced on VLCC sector,” Euronav said. It said that only around 40 – 50m tonnes of VLCC capacity was taken on for floating storage on shorter contracts.
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