VOLUMES of crude being held in floating storage have likely peaked as inventories draw down on improving oil demand, exposing the global tanker fleet to the post-pandemic landscape of fewer cargoes as producers cut output to stabilise prices.

Floating storage is tracked on 233.4m barrels on 191 tankers for the week ending May 18, according to Lloyd’s List Intelligence.

That is up from 181 tankers on 230.6m barrels on 181 tankers for the week-ago period, but down from the all-time record of 234.8m barrels at the beginning of May.

Some 7% (by deadweight tonnage) of the live fleet of some 2,800 tankers is tracked in floating storage — defined as laden tankers from very large crude carriers to aframax vessels at anchor for 20 days or longer, data show.

That compares with 2.9% three months ago, before countries entered lockdown to restrict movement and control the coronavirus spread.

The scale and duration of floating storage is viewed as key to providing a floor for volatile spot tanker earnings, with daily assessments falling for three consecutive days.

Evidence now suggests that the factors that rapidly built floating storage, which has nearly doubled in three months, are unwinding faster than anticipated. See our analysis article for more details.

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Shipowners specialising in the transportation of vehicles are facing a crisis with global car sales demand forecast to fall 21.8%.

LMC Automotive, a vehicle industry forecaster, predicts demand to drop to 70.6m units from 90.3m last year. Demand in Europe is set to decline 26.5% to 15m units, while in South America it will fall by 43.9%, according to the forecast.

China will be spared the worst, with a decline of 12% in 2020, while in India sales are expected to fall by half, taking the Asia-Pacific total decline to 17.3%.

Haig Stoddard, senior industry analyst at Wards Intelligence, a sister publication of Lloyd’s List, said the steep drop in Europe reflected outbreaks in the region’s big markets of France, Italy, Spain, the UK and Russia, where weak oil prices have already slammed the economy and vehicle demand.

“Germany, Europe’s biggest market, is a bright spot especially with lockdown measures there easing,” Mr Stoddard said.

North America is forecast to drop 22.3% to 15.7m units this year. The US and Canada were set to bounce back with double-digit growth in 2021. But Mexico, with its poor economic outlook and “questionable handling of virus containment”, was pegged for only a 9% gain in 2021 from a 25% decline this year.

South America, the smallest region, would see its global share contract from 4.5% to 3.3%, on a 42.2% drop in demand to 2.3m units.

“Volume spikes upward 34.8% in 2021 to 3.1m units, but with share climbing only partially back to where it was in 2019 to 3.8%,” said Mr Stoddard. Most demand in South America comes from Brazil, which like Mexico has been criticised for its handling of the virus, he added.

The global economic downturn is reflected in the year-on-year drop in ships calling at the two major Chinese container ports of Shanghai and Yangshan, but there is evidence that things are returning to near seasonal norms.

This was most starkly reflected in weeks 18 and 19 on the year, when calls fell by 17% and 23% respectively, before week 20 recorded just 21 fewer calls compared with 2019.

However, calls are likely to diverge again further into the year as further blanked sailings are announced in the peak third quarter of the year.

Ask the Analysts Webinar — Asia

The second in our series of Lloyd’s List Ask the Analysts webinars takes place on Thursday, May 28 and you now have the opportunity to register and put your question to the team.

This month, the focus turns to the outlook for markets in the APAC region.

The Lloyd’s List Asia editorial team will be joined by Lloyd’s List Intelligence Credit Risk Manager Vassilis Mitrelis to discuss topics including the region’s coronavirus response and the extent to which it is recovering from the economic shock.

The full list of panelists is as follows:

• Richard Meade, Editor, Lloyd’s List

• Vassilis Mitrelis, Credit Risk Manager, Lloyd’s List Intelligence

• Vincent Wee, Asia News Editor, Lloyd’s List

• Cichen Shen, China Editor, Lloyd’s List

• Hwee Hwee Tan, Senior Correspondent, Lloyd’s List

• Inderpreet Walia, Dry Bulk Reporter, Lloyd’s List

To register and ask your question, follow this link or select the banner below.