The overall number of tankers of all three classes used to store oil fell from 689 to 334.
In most classes, the average time recorded recorded for oil storage – for VLCC this declined from 63 days in 2020 to 50days in 2021(founded figures) and for Afaramax class vessels from 55 days to 52 days. The sole exception was for Suezmax class tankers, the average storage time increased from 62 to 71 days.
The need for storage aboard tankers became particularly acute in the second quarter of 2020 against the background of world-wide lockdowns, with demand for oil returning to 2006 levels (85.3 million bpd according to data from the Energy Information Administration of the U.S. Department of Energy). The sharp drop in demand led to negative prices for oil – a phenomenon previously confined to soe regional market sin the United States where producers were prepared on occasion to pay consumers for supplying gas. May futures for WTI on the final day before their expiration (20th April 2020) recorded a negative price of minus $38 a barrel.
Investors were scared away the risks of insufficient storage capacity at the key U.S. terminal at Cushing, Oklahoma, which, at that time, was filled to 70 % capacity. Land-based storage capacity continued to be filled over the next two months – commercial oil stocks in the United States in June 2020 reached a record maximum of 540 million barrels. Producers and investors tended to opt for oil storage. Among other factors, this allowed them to wait out a period of low prices in order to sell their oil at a higher price once the market recovered,
The easing of Covid restrictions undertaken in the second half of 2020 provided the with that very opportunity. Average monthly prices of WTI climbed from $16.5 a barrel in April 2020 to $40.80 in July.
The easing of Covid restrictions, introduced in the second half of 2020 provided that very opportunity. Average monthly WTI prices rose from $16.50 a barrel in April 2020 to $40.80 in July an$47.10 in December, according to World Bank calculations.
Prices continuing to rise in 2021, when the average price of WTI reached $81 a barrel (against $39.30 in 2020). Producers and investors no longer needed to wait for a period of high prices. And That led to less frequent use of tankers to storage oil.