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| The Oil Industry’s Glut Has a Bright Spot: Tanker Storage | The Oil Industry’s Glut Has a Bright Spot: Tanker Storage |
| (8 days later) | |
| The price of oil has plunged, but the price of finding a place to put it has soared. And if you are in the business of providing a temporary home for the world’s glut of crude, you’ve hit the jackpot. | The price of oil has plunged, but the price of finding a place to put it has soared. And if you are in the business of providing a temporary home for the world’s glut of crude, you’ve hit the jackpot. |
| More and more massive tankers at sea are being used simply to hold the oil — as much as two million barrels per vessel — until it is wanted. Other vessels are busy carrying it to buyers like China, which is taking advantage of prices not seen in two decades. | More and more massive tankers at sea are being used simply to hold the oil — as much as two million barrels per vessel — until it is wanted. Other vessels are busy carrying it to buyers like China, which is taking advantage of prices not seen in two decades. |
| Tankers are in demand, and their rates, as low as $25,000 a day in February, have ballooned to nearly $200,000 a day, even hitting almost $300,000 at one point. | Tankers are in demand, and their rates, as low as $25,000 a day in February, have ballooned to nearly $200,000 a day, even hitting almost $300,000 at one point. |
| “We are one of the few industries making money in this period,” said Hugo de Stoop, chief executive of Belgian-based Euronav, one of the world’s largest tanker companies. The current market for vessels, he added, “is totally and completely unusual.” | “We are one of the few industries making money in this period,” said Hugo de Stoop, chief executive of Belgian-based Euronav, one of the world’s largest tanker companies. The current market for vessels, he added, “is totally and completely unusual.” |
| Shipping is a business of wild swings that tax a vessel operator’s patience and balance sheet, and right now tanker owners are profiting from the same forces that are causing layoffs and bankruptcies at oil companies elsewhere. | Shipping is a business of wild swings that tax a vessel operator’s patience and balance sheet, and right now tanker owners are profiting from the same forces that are causing layoffs and bankruptcies at oil companies elsewhere. |
| Demand for oil has plummeted by about one-third as airplanes are parked on runways and cars sit at home, stilled by lockdowns aimed at curbing the spread of the coronavirus. At the same time, Saudi Arabia and its allies have ramped up output, as part of a price war with Russia. | Demand for oil has plummeted by about one-third as airplanes are parked on runways and cars sit at home, stilled by lockdowns aimed at curbing the spread of the coronavirus. At the same time, Saudi Arabia and its allies have ramped up output, as part of a price war with Russia. |
| The flood is filling tank farms to the brim, so traders and producers are chartering ships like Mr. de Stoop’s 70 oil tankers to hold their crude, waiting for a more advantageous moment to unload it. | The flood is filling tank farms to the brim, so traders and producers are chartering ships like Mr. de Stoop’s 70 oil tankers to hold their crude, waiting for a more advantageous moment to unload it. |
| The tanker industry is having its best spell in at least a decade, analysts say. | The tanker industry is having its best spell in at least a decade, analysts say. |
| Ships owned by companies like Euronav are like taxis, waiting for fares. Most of Euronav’s ships operate at so-called spot rates, essentially whatever they negotiate with customers, which vary from day to day. | Ships owned by companies like Euronav are like taxis, waiting for fares. Most of Euronav’s ships operate at so-called spot rates, essentially whatever they negotiate with customers, which vary from day to day. |
| Oil companies have been chartering Euronav’s very large crude carriers, or V.L.C.C.s — tankers longer than three football fields — for $150,000 to $200,000 a day, Mr. de Stoop said, depending on where they are going. As it costs about $18,000 a day to run a ship — for expenses like paying and feeding a crew of 25 — profits at the moment are huge. | Oil companies have been chartering Euronav’s very large crude carriers, or V.L.C.C.s — tankers longer than three football fields — for $150,000 to $200,000 a day, Mr. de Stoop said, depending on where they are going. As it costs about $18,000 a day to run a ship — for expenses like paying and feeding a crew of 25 — profits at the moment are huge. |
| It’s not always this way. To give an idea of the ups and downs possible in the industry, a tanker now heading from the Middle East to China will earn on average about $178,000 a day compared with $15,000 a year ago, according to Clarksons, a ship brokerage. | It’s not always this way. To give an idea of the ups and downs possible in the industry, a tanker now heading from the Middle East to China will earn on average about $178,000 a day compared with $15,000 a year ago, according to Clarksons, a ship brokerage. |
| Indeed, Mr. de Stoop has ridden through some spectacular swings in recent months. As the new year dawned, he said, charter rates were around $120,000 a day, but they plunged to around $25,000 in February when the economy in China, the world’s largest oil importer, essentially shut down to control the virus spread. | Indeed, Mr. de Stoop has ridden through some spectacular swings in recent months. As the new year dawned, he said, charter rates were around $120,000 a day, but they plunged to around $25,000 in February when the economy in China, the world’s largest oil importer, essentially shut down to control the virus spread. |
| After Saudi Arabia and Russia kicked off their price war in early March, rates soared well over $200,000 a day as the Saudis chartered as many as 18 tankers. | After Saudi Arabia and Russia kicked off their price war in early March, rates soared well over $200,000 a day as the Saudis chartered as many as 18 tankers. |
| The tanker business is receiving an added boost from the futures market, where traders are betting that oil in the months ahead will sell for much higher prices than the depressed $20 a barrel that Brent crude, the international benchmark, fetches now. Traders figure they can make money by parking oil on ships and selling it later. | The tanker business is receiving an added boost from the futures market, where traders are betting that oil in the months ahead will sell for much higher prices than the depressed $20 a barrel that Brent crude, the international benchmark, fetches now. Traders figure they can make money by parking oil on ships and selling it later. |
| The volume of oil idling off places like Fujairah in the United Arab Emirates or near a Chevron refinery in Long Beach, Calif., has soared 40 percent since the beginning of April, to 158 million barrels, said Alexander Booth, head of market analysis at Kpler, which tracks petroleum shipments. That is more oil than the world would consume over a day and a half in normal times. | The volume of oil idling off places like Fujairah in the United Arab Emirates or near a Chevron refinery in Long Beach, Calif., has soared 40 percent since the beginning of April, to 158 million barrels, said Alexander Booth, head of market analysis at Kpler, which tracks petroleum shipments. That is more oil than the world would consume over a day and a half in normal times. |
| Mr. Booth also said that in the same period the total amount of crude being carried on ships — what the industry calls oil on water — increased by about 100 million barrels to 1.2 billion barrels. Tankers may have destinations booked but are encountering long delays unloading their cargoes as refineries and other customers have no use for them. | Mr. Booth also said that in the same period the total amount of crude being carried on ships — what the industry calls oil on water — increased by about 100 million barrels to 1.2 billion barrels. Tankers may have destinations booked but are encountering long delays unloading their cargoes as refineries and other customers have no use for them. |
| Updated June 30, 2020 | |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | |
| Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. | Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| The huge increase is “a very strong signifier of how much excess oil is out there,” he said. | The huge increase is “a very strong signifier of how much excess oil is out there,” he said. |
| While Saudi Arabia and Russia agreed on April 12 to end their price war and cut 9.7 million barrels a day in production, or about 10 percent of world output, by May 1, the Saudis don’t yet seem to be backing off. Mr. Booth said Saudi Arabia had been loading an average of 10 million barrels a day onto tankers recently, about 2.5 million more than normal. He said the Saudis were maintaining these high levels despite already having sent several vessels to sea without clear destinations for their cargo. | While Saudi Arabia and Russia agreed on April 12 to end their price war and cut 9.7 million barrels a day in production, or about 10 percent of world output, by May 1, the Saudis don’t yet seem to be backing off. Mr. Booth said Saudi Arabia had been loading an average of 10 million barrels a day onto tankers recently, about 2.5 million more than normal. He said the Saudis were maintaining these high levels despite already having sent several vessels to sea without clear destinations for their cargo. |
| The business of shipping oil from the Persian Gulf is still strong, and shipping is much more profitable than storage: Mr. de Stoop said storage rates of around $80,000 a day were about half what he could charge for a voyage. | The business of shipping oil from the Persian Gulf is still strong, and shipping is much more profitable than storage: Mr. de Stoop said storage rates of around $80,000 a day were about half what he could charge for a voyage. |
| Analysts say that 10 to 15 percent of the world’s very large crude carriers are now being used for storage, and that the number is growing rapidly. In the short term, this form of demand is likely to support shipping rates, Mr. de Stoop said, because each tanker used to park crude is no longer available to transport it. | Analysts say that 10 to 15 percent of the world’s very large crude carriers are now being used for storage, and that the number is growing rapidly. In the short term, this form of demand is likely to support shipping rates, Mr. de Stoop said, because each tanker used to park crude is no longer available to transport it. |
| He said there were about 1,500 smaller vessels that could also be used for this purpose if the supply of large ones was exhausted. Rising charter rates may eventually make this form of storage prohibitively expensive. | He said there were about 1,500 smaller vessels that could also be used for this purpose if the supply of large ones was exhausted. Rising charter rates may eventually make this form of storage prohibitively expensive. |
| “I think we will run out of economic sense before we run out of ships,” he said. | “I think we will run out of economic sense before we run out of ships,” he said. |
| As shipowners relish the moment, some analysts warn that this corner of the oil industry is unlikely to thrive for long because of depressed demand for crude. | As shipowners relish the moment, some analysts warn that this corner of the oil industry is unlikely to thrive for long because of depressed demand for crude. |
| Jonathan Chappell, a shipping analyst at Evercore ISI, a securities broker, said the tanker operators were, in effect, seeing the activity of a couple of years crammed into six months. Once normality returns, he said, the futures market will shift, and traders and companies will liquidate the inventories of oil built up at sea and on land, slashing the need for ships. | Jonathan Chappell, a shipping analyst at Evercore ISI, a securities broker, said the tanker operators were, in effect, seeing the activity of a couple of years crammed into six months. Once normality returns, he said, the futures market will shift, and traders and companies will liquidate the inventories of oil built up at sea and on land, slashing the need for ships. |
| “At some point,” he said, “you are going to have to work through the hangover.” | “At some point,” he said, “you are going to have to work through the hangover.” |
| Mr. de Stoop said he was hopeful that with conditions in the oil markets having reached such extremes as the negative prices recorded on Monday, it would take a long time for the factors benefiting the tanker trade to correct. | Mr. de Stoop said he was hopeful that with conditions in the oil markets having reached such extremes as the negative prices recorded on Monday, it would take a long time for the factors benefiting the tanker trade to correct. |
| “In the meantime, we will enjoy this extraordinary period of time from an earnings point of view,” he said. | “In the meantime, we will enjoy this extraordinary period of time from an earnings point of view,” he said. |