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Barclays Bank has booked a supertanker to store gas oil, becoming the second investment bank to cash in on a potentially lucrative multi-million dollar oil trading play, industry sources said on Wednesday.
The new booking, the first in about a month, could give a short-term lift to a lackluster Asian gas oil market that has seen its prompt timespreads mired in discount for about a month and its cracks at weakened levels of below $7.00 a barrel.
Barclays is expected to take delivery of the Very Large Crude Carrier (VLCC), the Tai San, sometime between the end of the month and early August, traders and shipbrokers said.
The vessel, owned by Singapore shipping firm Ocean Tankers, a unit of the Hin Leong group, has options for time-charter here in Asia and in Europe, shipbrokers said.
"The option on the vessel still remains unclear, because the owner is keeping very tight-lipped on this one... but what we have gathered is this will be used for storage," an Asian-based shipbroker said.
The 319,000 deadweight tonne vessel, a new supertanker, will have its tanks tar epoxy coated, to allow for the loading of gas oil, industry sources said.
U.S. investment bank JP Morgan Chase & Co [JPM
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] last month hired a supertanker to store gas oil off Malta's coast.
So far some 62 million barrels of gas oil and jet fuel are being stored in vessels off Europe due to poor global demand and to take advantage of an ongoing contango market -- where prices for fuel for delivery in future months is higher than now.
The main companies storing fuel on ships are European trader Vitol, Royal Dutch Shell and Geneva-based Trafigura Beheer BV, industry sources said.
In the longer term, oil at sea could weigh on distillate prices for months to come, even when seasonal demand rises in winter, traders said.
Asian gas oil cracks for August were valued at $6.25 a barrel on Wednesday, and stayed at below $7.00 for the last three sessions and well below its most recent high of $9.55 in early June when vessel bookings to move cargoes peaked.
Gas oil's July/August timespreads have been in contango of 30-60 cents since the contract became prompt in mid-June while the timespread on the IPE was valued at a contango of $8.75 a tonne by 7.09 am London time, well above the minus $11-$13 a tonne in early June.
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Data is a real-time snapshot *Data is delayed at least 15 minutes