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Storage Market: Petroleum

Crude has been ebbing and flowing in a 5 USD range. 65 on WTI and 70 on Brent seem to be big hurdles to take. All products are now in backwardation, only WTI is flirting with contango again.

The Gasoil front spread is relatively strong at 4 USD back, at least compared to previous months on healthy European demand, low inventories and turnarounds.

Fuel oil is having another slow month. Only one VLCC to the East has been booked and only one Suezmax on subs so far. The curve is only showing a small contango on the front, but the rest of the curve is in a proper backwardation. We have seen a few inquiries for the storage of Fuel oil in the second half of March but rates for heated storage are just too high to make anything work.

Gasoline has cooled off, the winter/summer spread game is gone. Tanks are still full as many players have benefited from the spread and locked in April/May at elevated levels. We have even seen a rare phenomenon in March where traders were storing gasoline on tankers off Europe’s coast as they struggled to contain a steady rise in supplies since the start of the year that has weighed on prices. We can expect some action in the market soon though as the physical spot market is backwardated, the financial curve is backwardated as from June and the arb is only working on paper. So, we will probably see emptying of tanks going forward.