OSLO, Jan 6 (Reuters) - Oslo-listed crude tanker group Frontline expects continued high demand and solid freight rates, boosted by the drop in oil prices and increased contango driven storage, Chief Executive Robert Hvide Macleod told Reuters on Tuesday.
A seasonal rise in oil demand and buyers taking advantage of lower prices to boost stocks have sent freight rates for Very Large Crude Carriers (VLCCs) up 100 percent since mid-October to around $55,000-$60,000 per day.
Macleod said he believes the current rate levels are sustainable.
“We still see a solid demand and rates are holding up well, even though they are down slightly from the top,” he said. “The bunker fuel price helps us and the market is holding up well.”
Frontline’s shares are up 13 percent on Tuesday after doubling its market value during the past month, making it the second best performer on the Oslo Stock Exchange in the same period.
Macleod said the low oil price has increased the demand for ships being used for storage as oil prices are expected to rise towards the summer.
“There is a strong contango in the market, around 6 dollars (per barrel of oil) from February to August 2015,” Macleod said.
“A lot of people are looking for storage units, especially in the West. I would say it’s in an early phase so it’s impossible to say how many ships eventually will end up being used for storage.” (Reporting by Joachim Dagenborg, editing by Terje Solsvik)