It costs traders more than $200,000 a day to ship liquefied natural gas in the Atlantic basin as the use of ships as floating storage facilities reduces tanker supplies, reports Yahoo.
Daily charter rates for October and November are at $206,750 and $284,750, respectively, according to Spark Commodities data cited by Bloomberg. That’s more than double from current levels.
Surge in freight rates
The surge in freight rates comes amid a drop in the availability of tankers, many of which are being used by traders as floating storage to hoard the commodity following Russia’s invasion of Ukraine.
Just last month, a cluster of Saudi Arabian oil tankers were seen floating in the Red Sea, boosting the amount of crude oil being stored at sea globally to a two-year high.
After the Ukraine war broke out, Europe rushed to pad out its energy reserves as Russia – a key supplier of natural gas – began cutting flows in retaliation to Western sanctions.
Europe was also preparing for a harsh winter that never came, with the continent experiencing its third warmest January in 2023. It’s meant the region now has more gas than it needs.
Meanwhile, Russia has been using ships to store its unwanted diesel, further squeezing tanker supplies. Despite selling huge amounts of its crude oil and products to countries like India and China, Moscow is still having trouble finding buyers for its energy products – dumping its diesel into floating storage.
With sky-high charter rates, the risk is that they could push up gas prices before winter.
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Source: Yahoo
