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mick silver
14th January 2016, 12:53 PM
http://www.zerohedge.com/news/2015-12-16/something-strange-taking-place-middle-atlantic-ocean
Early last month, we noted (http://www.zerohedge.com/news/2015-11-12/something-very-strange-taking-place-coast-galveston) that something very strange was happening off the coast of Galveston, Texas.
As FT reported, "the amount of oil [now] at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply.” In short: the global deflationary crude supply glut is beginning to manifest itself in a flotilla of stationary supertankers, as millions of barrels of oil are simply stuck in the ocean as VLCCs wait to unload.
Ultimately, this led to nearly 40 crude tankers with a combined cargo capacity of 28.4 million barrels waiting to anchor near Galveston. Here’s what the logjam looked like:
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/11-overflow/galveston%20jam_0.jpg (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/11-overflow/galveston%20jam.jpg)

In the latest sign that the world is simply running out of capacity when it comes to coping with an inexorable supply of commodities, three diesel tankers en route from the Gulf to Europe did something rather odd on Wednesday: they stopped, turned around in the middle of the ocean, and headed back the way they came!
"At least three 37,000 tonne tankers - Vendome Street, Atlantic Star and Atlantic Titan - have made U-turns in the Atlantic ocean in recent days and are now heading back west," Reuters reported (http://www.reuters.com/article/europe-diesel-idUSL8N1443F420151215), citing its own tracking data.
The Vendome Street actually made it to within 800 miles of Portgual (so around 75% of the way there) before abruptly turning around. "Ship brokers said a turnaround so late in the journey would come at a cost to the charterer," Reuters notes.
The problem: low prices, no storage capacity, and soft demand.
http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/20151216_EUDiesel_0.jpg (http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/20151216_EUDiesel.jpg)
http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/20151216_EUDieselUSD_0.jpg (http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/20151216_EUDieselUSD.jpg)
Here's Reuters again:





"European diesel prices and refining margins have collapsed in recent days to six-year lows as the market has been overwhelmed by imports from huge refineries in the United States, Russia, Asia and the Middle East. At the same time, unusually mild temperatures in Europe and North America further limited demand for diesel and heating oil, ptting even more pressure on the market.

Gasoil stocks, which include diesel and heating oil, in the Amsterdam-Rotterdam-Antwerp storage hub climbed to a fresh record high last week.
And here are the stunning visuals via MarineTraffic.
Vendome Street
http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/Vendome%20Street_0.jpg (http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/Vendome%20Street.jpg)
Atlantic Titan
http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/Atlantic%20Titan_0.jpg (http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/2015/12/Atlantic%20Titan.jpg)
As of now, it's "unclear if the tankers will discharge their diesel cargoes in the Gulf Coast or await new orders," but what you're seeing is a supply glut so acute that tankers are literally just sailing around with nowhere to go as there are reportedly some 250,000 tonnes of diesel anchored off Europe and the Mediterranean looking for a home. On that note, we'll close with the following quote from a trader who spoke to Reuters:





"The idea is to keep tankers on the water as long as you can and try to find a stronger market."
mick silver
14th January 2016, 12:59 PM
Related: Energy, (http://www.reuters.com/sectors/energy) Industrials (http://www.reuters.com/sectors/industrials)
Diesel tankers make U-turn in mid-Atlantic as Europe stocks swellLONDON | By Ron Bousso and Libby George





















LONDON Dec 15 Tankers laden with diesel heading from the U.S. Gulf Coast to Europe are turning around in mid-ocean as European storage is nearly filled to the brim.
At least three 37,000 tonne tankers - Vendome Street, Atlantic Star and Atlantic Titan - have made U-turns in the Atlantic ocean in recent days and are now heading back west, according to Reuters ship tracking.
It is unclear if the tankers will discharge their diesel cargoes in the Gulf Coast or will await new orders, according to traders and shipping brokers.
"European prices are so soft," one trader said. "Sellers must see better numbers."
The Vendome Street was more than three quarters of the way to Europe, turning around just 800 miles off the coast of Portugal. Ship brokers said a turnaround so late in the journey would come at a cost to the charterer.
European diesel prices and refining margins have collapsed in recent days to six-year lows as the market has been overwhelmed by imports from huge refineries in the United States, Russia, Asia and the Middle East.
At the same time, unusually mild temperatures in Europe and North America further limited demand for diesel and heating oil, ptting even more pressure on the market.
Gasoil stocks, which include diesel and heating oil, in the Amsterdam-Rotterdam-Antwerp storage hub climbed to a fresh record high last week.
Prompt Low Sulphur Gasoil futures, the European diesel benchmark, have been trading at sharp discount to later contracts, in what is known as contango, prompting traders to store product.
In some cases, traders opted to store product on tankers. At least 250,000 tonnes of diesel are currently anchored off Europe and the Mediterranean seeking a discharge port, according to traders.
"The idea is to keep tankers on the water as long as you can and try to find a stronger market," a trader said. (Editing by William Hardy)
http://www.reuters.com/article/europe-diesel-idUSL8N1443F420151215
singular_me
14th January 2016, 01:25 PM
in town this morning, gas stood at $1.63/gallon. I had a strange feeling, happy it was so cheap but then very worried as I could sense an oil crash around the corner.
Horn
14th January 2016, 02:03 PM
in town this morning, gas stood at $1.63/gallon. I had a strange feeling, happy it was so cheap but then very worried as I could sense an oil crash around the corner.

Prices for perishable items are not following oil down only staying or rising. That's a rub and rig that can only get worse when oil does rise again.
cheka.
14th January 2016, 02:12 PM
no offense mick, but the author of that article is either ignorant or corrupt

i look at that pile of ships on a daily basis as part of my job - the picture in his article is the norm

galveston/texas city/houston/baytown/bayport docks parking area
singular_me
14th January 2016, 02:29 PM
well it is at the state level one has to see this, there is less tax oil driven revenues for the state, and if the state gets into a debt crunch, so do we. Its kinda like a domino theory. Just imagine states that can no longer afford their food stamps scheme... pay its employees, etc.



Prices for perishable items are not following oil down only staying or rising. That's a rub and rig that can only get worse when oil does rise again.
Glass
14th January 2016, 05:55 PM
no offense mick, but the author of that article is either ignorant or corrupt

i look at that pile of ships on a daily basis as part of my job - the picture in his article is the norm

galveston/texas city/houston/baytown/bayport docks parking area

They are also talking about this in the Atlantic, with no ships crossing the atlantic for the first time in some decades. The story goes that economies collapsing, no international trade etc.

I have also heard there is an "insurance" issue with the situation around the mid east, suez etc. I've heard that Lloyds et al were putting the word on shipping lines regaridng paying out claims if something happened to their ships in those areas. As a result no one can get covered. How true is it?
Horn
14th January 2016, 06:49 PM
They are also talking about this in the Atlantic, with no ships crossing the atlantic for the first time in some decades. The story goes that economies collapsing, no international trade etc.

I have also heard there is an "insurance" issue with the situation around the mid east, suez etc. I've heard that Lloyds et al were putting the word on shipping lines regaridng paying out claims if something happened to their ships in those areas. As a result no one can get covered. How true is it?

No doubt someone is looking to balance out those loses in the BDI and overall shipping with an increase in some other area. Ships doing U-turns cant be normal, can it? Did europe suddenly increase its port tax to offset immigrant costs?