LONDON, June 3 (Reuters) - JPMorgan Chase & Co (JPM.N) has hired a crude tanker vessel to store gas oil off Malta’s coast, shipping sources said on Wednesday.
The U.S. investment bank declined to comment. Storing any light, refined oil products in a crude oil tanker is unusual.
But one shipping source said the vessel, Front Queen, was a new very large crude carrier (VLCC) which had never had a cargo on board meaning that its tanks were clean and able to carry refined products.
The tanker was able to carry up to 2 million barrels of oil, the source said.
Separately, a shipping source said another new VLCC had been fixed to store gas oil off Malta’s coast by a trading house.
VLCC freight rates have been depressed in recent months due to weak demand for crude, while clean tanker rates have enjoyed some gains partly due to arbitrage opportunities to ship products from Europe to the United States.
Some oil traders said that might have encouraged the companies to store gas oil in crude tankers.
A fall in oil demand this year has forced oil companies to store crude oil and middle distillates, mainly gas oil for heating and jet fuel, in tanks on land and tankers anchored at sea.
The bulk of middle distillates stored in tankers have been held in floating storage in Europe, where oil demand has been falling more sharply than the rest of the world and a steep contango on the futures market, or discounts on prompt contracts to longer-dated, has still been attracting inflows.
Reporting by Jonathan Saul, editing by Ikuko Kao and Keiron Henderson