Sky-bound fuel has found a new home: on water. Crude oil and petroleum distributor Vitol Group is lifting its number of floating storage vessels to store jet fuel.
The company booked five tankers, with a potential to hold 450,000 tonnes of jet fuel in August, at charter rates ranging between $17,000 (13,460) and $20,000 a day, a survey of shipping fixtures shows.
Ship brokers based in Asia say the ships are likely to be loading in the Persian Gulf and northwest Europe.
Contango continues to keep floating storage attractive. Over the last two years, companies have used storage to take advantage of the contango. If storage costs are low enough, the price structure allows traders to make a profit by buying crude or products in the spot market, then selling them at a pre-agreed price in the future.
ICAP Shipping in London estimates 40.62 million barrels of clean oil products are being stored offshore worldwide as of 12 August with 79% of the volumes located in northwest Europe and west Africa.
The figure is up from 35.3 million barrels calculated by ICAP on 14 July.
West Africa is hosting most of the gasoil being held on tankers, while in Northwest Europe there have been growing levels of jet fuel held offshore. ICAP says floating jet storage in the region more than doubled to 12.9 million barrels in August compared with 4.7 million barrels in July.