Floating storage

Under the ClipperData criteria used by the EIA, a tanker counts as floating storage if it loaded at a crude export facility and has sat anchored or drifting slowly for at least seven days in an offshore area where idle ships gather. Cargoes that cannot be discharged because of port congestion can also end up in the estimate. The test counts location and time; it says nothing about who owns the cargo or why it is waiting.

The classic trigger is the futures curve. When the front-month contract trades at a steep discount to later deliveries, the market is in contango, and buying oil today, parking it on a ship and selling it forward starts to pay. According to an EIA note of 4 February 2016, the cost of chartering a vessel and crewing it for months means the trade does not usually become economical until contango reaches 10–12 dollars a barrel.

The measurement trap is that not every barrel at sea is waiting for the same reason. EIA data show global floating storage rising from 66 million barrels on 1 March 2020 to 222 million barrels on 9 July 2020, a build driven by collapsing demand and contango. A sanctioned producer, by contrast, keeps oil on ships because it cannot find a buyer or cannot reach the one it has. Both show up in the same data, yet they push prices in opposite directions.