oil tankers

Oil Tanker Glut

If you put all of the idle oil tankers in a row, it would stretch for 26 miles. Even worse, it might indicate a 25% rate decrease for shipping in 2010.

A 26-mile-long line of idled oil tankers, enough to blockade the English Channel, may signal a 25 percent slump in freight rates next year.

The ships will unload 26 percent of the crude and oil products they are storing in six months, adding to vessel supply and pushing rates for supertankers down to an average of $30,000 a day next year, compared with $40,212 now, according to the median estimate in a Bloomberg News survey of 15 analysts, traders and shipbrokers. That’s below what Frontline Ltd., the biggest operator of the ships, says it needs to break even.

Notice that the shippers won't break even at that price.