The oil market is getting so glutted that tiny barges that would normally be busily moving fuels around Europe’s petroleum-trading hub are suddenly storing traders’ cargoes instead.
For weeks now, oil and fuel traders have been clamoring for almost any storage facilities they can hire, filling on-land tanks and even ocean-going supertankers. But the deployment of barges — tiny vessels by comparison — has taken the hunt for places to stash cargoes to a new dimension.
We are storing distillates in seven kinds of vessels right now, from barges all the way to supertankers, said Ben Luckock, the co-head of oil trading at Trafigura Group, one of the world’s top commodity merchants. This is becoming a freight issue.
The shipping market is increasingly reflecting an oil industry that’s in distress because of the hit to demand that’s been caused by the coronavirus, causing a huge glut. Rates to transport refined fuels have surged to new highs this week in part because so many tankers are being deployed to store cargoes, a phenomenon that had already afflicted the crude oil market.
Barges in the Amsterdam-Rotterdam-Antwerp trading hub, or ARA for short, might typically carry anywhere from about 2,000 to 6,000 tons of cargo, making them minnows when compared to the tankers that routinely deliver the world’s oil and fuels. The largest ocean-going vessels often haul more than 280,000 tons of cargo.
Riverlake Barging, a firm that brokers barge shipments to, from and around ARA, confirmed that a handful of vessels have been booked for floating storage.
Everyone is checking the possibility of floating storage, Jelle Vreeman, a broker at Riverlake said. “Because inland storages are so full, there’s no alternative to store it on land, so that’s why they use barges now.
A lack of recent activity in the area has made the barge freight rates relatively cheap, helping to make the ships a more attractive proposition for storage, he said.
Barges have previously been used as floating storage in ARA, but normally only for short-term logistical purposes, such as needing to free up space in a storage tank. Now, the situation is more structural. There is a lot of interest and it is being done for economic reasons, Vreeman said.
We are seeing high demand for barge storage in the Amsterdam-Rotterdam-Antwerp region for a range of oil products and a range of time periods, said Lars Van Wageningen, operations manager at Insights Global, a firm that monitors the area’s inventories. Companies are looking for storage to play the market and make a profit in the future.