March 12, 2015 / 8:19 AM / in 5 years

REFILE-Handful of supertankers holding oil as contango play fades

(Removes broken link to interactive map)
    * Of 12 tankers booked for storage, only five filled with crude
    * Tankers hold Mideast, African oil, sit off Fujairah and Malaysia

    By Florence Tan and Keith Wallis
    SINGAPORE, March 12 (Reuters) - Only a few of the supertankers still
chartered by traders for storage are filled with crude because a play to hold
cheap oil and sell it later has lost momentum after prices recovered from
six-year lows more quickly than expected.
    Traders had been looking for profit from storing oil and selling it later at
higher prices in the so-called contango play. But the recovery in crude prices
  has rendered storing oil onboard tankers unprofitable, senior
traders from Glencore and Statoil have said. 
 
    More than 30 tankers had been put on long-term charter at the start of this
year to play the contango, but vessels still earmarked for storage have dropped
to 12. Of these, only one Ultra Large Crude Carrier (ULCC) and four Very Large
Crude Carriers (VLCCs) are filled with oil, according to Thomson Reuters
shipping data, shipbrokers and traders. 
    "What is not so easy to grasp is how many ships will actually store (oil).
We will see in Q2," said Robert Hvide Macleod, chief executive of Norway's
Frontline Management, one of the world's largest tanker operators.   
    Most of the tankers booked on annual charters are now delivering crude as
usual, traders and shipbrokers said.
    Some traders who had earlier made the contango play have already taken
profit on some of their stored oil and are looking for the next opportunity to
store more.  
    Traders and analysts expect a supply overhang to cause prices to drop
sharply again in the second quarter before recovering in the second half this
year. 
    "Everybody agrees we're going to recover in the second half but it's just a
matter of what happens in the second quarter," said Tony Nunan, a risk manager
at Mitsubishi Corp.        
    Brent crude fell 60 percent from above $115 a barrel in June last
year to a nearly six-year low in January at just over $45 a barrel. It has since
recovered to around $60 as U.S. oil output growth slows and Middle East and
North Africa supply disruptions threaten. 

    Supertankers used for storage
 TANKER        Charterer  Manager      Carrying            Status on
                                                           March 11
 TI Europe     Unipec     Tankers UK   NA                  anchored off
                          Agencies                         Linggi,
                                                           Malaysia
 Eliza         Vitol      Dynacom      Qua Iboe loaded in  anchored off
                                       Jan                 Linggi,
                                                           Malaysia
 Pioneer       KOCH       Seateam      Basra Light loaded  moving in Red
                          Management   in Feb              Sea
 Good News     Gunvor     New          Omani crude loaded  anchored off
                          Shipping     in March            Fujairah
 Olympic Hawk  Shell      Springfield  African oil         anchored off
                          Shipping                         Malacca
 Sources: Reuters shipping data, shipbrokers, traders   


 (Editing by Tom Hogue)
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