Europe gasoil floating storage stands at 35m barrels - traders

01 December 2009 16:29  [Source: ICIS news]

LONDON (ICIS news)--Gasoil floating storage in Europe now stands at around 35m barrels after the steep contango structure in ICE futures and the end-of-month trading position scramble have placed all storage facilities at a premium, traders said on Tuesday.

Recent reports had placed floating storage in Europe at around 27m barrels, but recently chartered vessels pushed amounts up by a further 8m barrels, traders said.

“I hear [floating storage] is about 25 vessels plus for gasoil – a minimum of 35m barrels. The latest chartered were two times 160,000 tonne vessels, at $20,000 per day,” said one trader.

The cost of storage is more than covered by the forward contango curve for ICE gasoil futures, as the inter-month spread has January gasoil currently $11/tonne more expensive than December gasoil – enough for those able to store material to lock in a profit on it.

“[The inter-month spread] was even wider in the past few days. End-user demand inland is very limited. However, like always, before [the front-month] expiry, every room is filled up if discounts are possible,” said another trader.

The contango structure and positional play for storage space have been in place for several months in 2009, and market participants said they believe that the situation would remain the same for the first half of 2010.

“It looks like [the contango] won’t shift before the second half of 2010, at least if prices don’t rise too much,” said the first trader.

The second trader said: “It might even hang on for longer as the financial institutions like [the contango] in their trading.”

For more on petrochemicals visit ICIS chemical intelligence
Read Paul Hodges’ Chemicals and the Economy Blog
To discuss issues facing the chemical industry visit ICIS connect

By: Alex Davis
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly