Coronavirus News Asia

Tankers thrive while oil tanks in Singapore

SINGAPORE – Dozens of oil supertankers have dropped anchor off the coast of Singapore with no clear timetable for when they may offload millions of barrels of unwanted oil they have been chartered to carry.

The Asian oil-trading hub’s onshore storage facilities are at capacity, leaving tankers of varying sizes crowding the seas to serve as floating storage vessels.

To be sure, Singapore isn’t alone in struggling to store surplus barrels. Global demand for oil has plummeted by as much as 30% this year, equal to around 30 million barrels per day, as Covid-19 lockdowns bring much of the global economy to a halt.

An unprecedented supply glut is simultaneously overwhelming global storage facilities as oil producers, refiners and traders hunt for space to store their crude until demand returns and supplies can be sold.

When West Texas Intermediate (WTI) futures contracts for May tumbled into negative territory on April 20, a historic first, the price collapse was attributed to market worries about fast-dwindling storage capacity.

WTI prices are spiralling again after falling nearly 25% fall on Monday (April 27), closing at US$12.78 a barrel. The US benchmark continued to slide in Asia trading on Tuesday, with June futures slipping to $11.86 per barrel after a 7% drop. Brent crude, the international oil benchmark, traded at $20.40 per barrel.

Onshore inventories in the United States are rapidly filling up amid fears that Oklahoma’s Cushing storage hub could reach maximum capacity in May, raising the possibility of a negative price plunge for June’s WTI futures contracts.

But the topsy-turvy oil market has seen business boom for the world’s fleet of supertankers, a growing number of which are taking on oil at a premium that industry sources say is around eight times their average daily break-even costs.

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