By Alaric Nightingale
Jan. 7 (Bloomberg) -- Oil traders are seeking as many as 10 supertankers to store crude, potentially taking the amount hoarded at sea to almost five days of European Union demand, according to Frontline Ltd., the largest owner of the vessels.
About 25 of the carriers, each able to hold about 2 million barrels of crude, were already hired for storage. There are enquiries for 5 to 10 more, Jens Martin Jensen, Singapore-based interim chief executive officer of the company’s management unit, said by phone today.
Thirty-five supertankers represent about 7 percent of the global fleet of very large crude carriers, according to data from London-based Drewry Shipping Consultants Ltd. Storing oil in tankers may boost rental rates that fell by a record 78 percent last year as slower economic growth sapped demand for energy.
Traders are seeking to lease ships for three to nine months, Jensen said. Crude oil for December delivery traded at $61.71 a barrel as of 7:35 a.m. in London, about $14 more than the February contract. Oil companies and traders may be able to profit from storing the oil, assuming shipping, insurance and financing costs are covered.
Iran, the second-largest member of the Organization of Petroleum Exporting Countries, idled as many as 15 of its biggest ships in May to store crude. That contributed to three consecutive months of higher rental rates for ships.
EU oil consumption averaged 14.8 million barrels a day in 2007, according to data from BP Plc.
To contact the reporter on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net
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