According to shipping sources, tens of millions of barrels of crude oil and petroleum products stored on tankers at sea due to coronavirus crisis, are being sold as the demand increases.
Fuel demand fell by 30% from March to May, and supply surplus were stored on land and at sea.
It is stated that the crude oil stored in tankers fell from 180 million barrels to 150 million barrels at the end of June.
The refined products kept on the ships fell from the peak of 75 million barrels in mid-May to 50 million barrels and the fastest gasoline stocks decreased.
The volumes stated regarding floating storage may drop quite rapidly in July.
There has been demand for floating storage at the peak of the crisis. By the way, as the cargoes to be delivered in the short term were cheaper than the long term that would be delivered until the prices go up, the market of contango has evolved when traders find it reasonable to store fuel. The traders who take their steps correctly in their commercial decisions are reaping the fruits of the system.
Meanwhile, contango does not give much courage to store fuel, when it is shrinking with increasing demand in a short while.
In addition, the allies, known as OPEC, Russia and OPEC + and its allies, the United States and many oil producing countries have reduced production, which is leaving less products to be stored at sea. Storage at sea is a more expensive option than land.
The necessity of land storage decreased when output levels further limited. That encouraged to store crude oil less when it coupled with the drop in price contango.
An estimated 218 million barrels of crude oil were stored in tankers as of 26 June, despite the peak of 290 million barrels in early May. As for the oil product, about 70.5 million barrels of products were stored for the May summit, compared to 100 million barrels.
As a matter of fact, it is believed that floating storage will now gradually decrease and return to normal levels in the fall.