Smaller tankers

Traders typically look to use the largest ships for oil storage as they are the most cost-effective. In recent days though, shipowners have also been receiving inquiries about smaller vessels that can hold a million barrels or fewer and for periods of time longer than 12 months, said International Seaways Chief Executive Officer Lois Zabrocky.

“This is a once-in-a-generation type of event,” she said Thursday.

Profits have been growing this week for keeping barrels on the water, according to shipbroker and exchange data compiled by Bloomberg. It costs $5.40 a barrel for a six month charter, according to data from E.A. Gibson Shipbrokers Ltd. sent on Thursday. The comparable contango — or the premium for later prices — far exceeded that, according to exchange data.

Tanker rates have jumped in recent weeks as the glut boosts demand for the ships. Benchmark rates have jumped to about $120,000 a day, from about $40,000 at the start of the month. They continued to strengthen on Friday, something that makes storage less profitable, according to people in the market.

“Floating storage is really the name of the game presently,” said Espen Fjermestad, an analyst at Fearnley Securities AS.