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Frontline CEO foresees rise in storage of oil on vessels

Published 06/16/2017, 12:34 PM
Updated 06/16/2017, 12:34 PM
© Reuters.  Frontline CEO foresees rise in storage of oil on vessels
  • Frontline (FRO +0.2%) expects a growing number of supertankers to be used for storing crude in anticipation of higher oil prices, CEO Robert Macleod tells Reuters.
  • While none of FRO's 20 very large crude carriers are currently used for this purpose, independent shipbrokers estimate that ~10 of the world's VLCCs recently have been contracted for oil storage - a number Macleod says "sounds correct, and the number is rising."
  • VLCC spot rates are below FRO's cash breakeven level of $22.3K/day, trading at just $15K-$20K and making storage relatively inexpensive for companies who believe oil prices will rise.
  • Now read: VLCC Tanker Newbuild Orders Continue To Pile Up


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