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Unsold oil stuck on tankers threatens world market gridlock

Unsold oil stuck on tankers threatens world market gridlock
November 13
20:41 2015

Reuters
Article by BY JONATHAN SAUL AND LIBBY GEORGE

As land storage sites worldwide reach brimming point due to a supply glut, tens of millions of barrels of oil are sitting on tankers looking for homes – threatening logistical paralysis.

The International Energy Agency on Friday said stored oil has hit 3 billion barrels. Traders say the excess of crude is leaving tankers queuing at major ports worldwide, lengthening waiting times to days, weeks and even months. [IEA/M]

The lack of space to unload oil is tying up the tankers needed to keep oil moving, and wells running. The bottlenecks could force oil suppliers into quick, cut-priced sales just to free space, adding more pressure to oil prices already close to six-year lows.

The cost to hire a supertanker – each capable of carrying 2 million barrels of oil – recently hit its highest level since 2008 at over $100,000 a day last month and currently remains at over $70,000 a day.

“We’re alarmed,” said Eugene Lindell, senior crude market analyst with JBC Energy. “There are growing indicators that it’s getting harder to digest this crude.”

FROM TEXAS TO CHINA

In the U.S. Gulf, more than 50 commercial vessels were anchored outside ports near Houston at the end of last week, of which 41 were tankers.

Trade sources said there were seven aframax tankers – each capable of carrying up to 700,000 barrels of oil – sitting outside Rotterdam waiting to unload. There was also nearly 15 million barrels of unsold West African crude oil either loaded on tankers or waiting to be loaded in the next two weeks. CLICK HERE TO READ THE REST OF THIS ARTICLE ON REUTERS

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