(EnergyAsia, February 18 2015, Wednesday) — In the latest oil crisis caused by crude prices plunging 50% over the second half of 2014, traders turned to storage to hedge against a protracted supply glut. The same strategy of stockpiling was deployed in 2008 when Brent crude went the other way, surging to a record high of over US$145 a barrel on fears of supply shortages.
The storage sector’s status as the oil industry’s all-round performer in good and bad times has largely been cemented in Asia over the past two decades where traders have refined the art of stockpiling and blending with futures trading, pricing and just-in-time logistics to buy and sell oil.
Storage has played a key role in shaping Asia’s oil trade following the first two oil shocks of 1974 and 1979 that broke the international distribution system controlled by the supermajors.
Asia’s rapid oil and gas demand growth, liberalisation of its energy sector, the rise of futures trading, and the waning influence of the supermajors have created demand for independent storage operators to help traders build and manage new supply chains.
Today, the region offers a creative mix of storage choices provided by independent operators like Royal Vopak and Oiltanking, state-owned firms, the supermajors, floating vessel operators, and traders. With Brent crude down from a high of US$115 a barrel last June to around US$50 at the end of January, China, South Korea, Southeast Asia and Australia have staked out unique positions in the region’s oil trading and storage play.