SINGAPORE- Nearly 30 tankers laden with liquefied natural gas (LNG) are idling in mostly Asian and European waters, as traders take advantage of cheap prompt prices and freight rates in a bet that high winter demand will eventually boost the market.
Storing crude oil in tankers is relatively common when land storage is full and the market is in contango, meaning it is cheaper to buy fuel now than for future delivery.
But LNG floating storage is a bigger gamble given higher costs and because LNG cargoes lose volume through evaporation.
Rebecca Chia, analyst with data intelligence firm Kpler, said 27 vessels were marked as floating storage mostly in Asia and western Europe, a peak for the northern hemisphere summer so far.
“Floating storage on LNG seems to have become the new norm for this year as the market continues to be plagued by tepid industrial demand brought about by COVID-19,” she said.
The traders are capitalizing on a wide spread between summer and winter pricing and relatively cheap freight rates.
