According to the Wall Street Journal, prices to move oil around the world are soaring as demand to store fuel on ships takes on a bigger role in energy markets. Charter prices for vessels that transport refined oil products have nearly quadrupled since the start of March, the WSJ’s Joe Wallace reports, and the Baltic Clean Tanker Index measure of freight rates hit a record high late last month before slipping back.
The surging prices show how the demand for “floating storage” for crude has spilled into broader fuel transport business. With global stockpiles of petroleum forecast to grow by around 550 million barrels this quarter, a race is under way to store surplus gasoline, diesel and jet fuel at sea. The number of available tankers that handle refined petroleum products has plummeted. Lloyd’s List Intelligence says the volume of crude and oil products in storage on tankers recently reached a record 196 million barrels.
Commodities
Coal volumes are evaporating from U.S. rail networks and they don’t appear to be coming back. Electricity generation from coal-fired power plants is forecast to decline 20% in 2020 from a year ago, the WSJ’s Scott Patterson and Jonathan Randles write, and one analysis suggests renewable sources topped coal for the first time on a quarterly basis in the first three months of the year. U.S. coal production is sliding and the upheaval in energy is accelerating as electricity demand declines under coronavirus restrictions.
Freight railroads are feeling the impact in the sector’s single biggest market by volume. Coal loads are down 21.4% so far this year, and average weekly carloads measured by the Association of American Railroads recently reached a record low. Railroads had more than 44,000 hopper cars, the equipment used in coal transport, in storage last month, up more than 50% from last October.
