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By Jonathan Saul and David Sheppard
LONDON, Jan 21 (Reuters) - Oil traders have booked up to 20tankers to store an estimated 40 million barrels of crude atsea, rising from 25 million barrels last week, as they soak up astocks glut in anticipation of future profits, shipping and oilmarket sources said.
The more than 50 percent fall in spot prices since Juneenables traders to make money by storing the crude for deliverymonths down the line, when prices are expected to recover.
The sources said the volume of oil earmarked for floatingstorage had risen in recent days. Some of the tankers couldnonetheless still be used for conventional oil transportation.
"Floating storage remains a major focus in the tanker marketas charterers have been fairly active in securing VLCCs (verylarge crude carriers) on time charters, with options to use thevessels as floating storage," said Omar Nokta of ClarksonCapital Markets.
In the past two weeks, trading firms including Trafigura, Vitol, Gunvor, Koch and energycompany Shell have started booking oil tankers forfloating storage for up to 12 months, according to industrysources and freight bookings seen by Reuters.
This trading strategy was last used in 2009 when pricesslumped and led to more than 100 million barrels of oil beingparked on tankers at sea before stocks were sold off.
Industry sources say rates to hire vessels for longerperiods -- known as time charters -- have risen by a fewthousand dollars a day in the past week to over $40,000 a day,and are quoted at more than double the level at the same timelast year.
"On average the latest one-year charters have been donearound the $38,000/day to $40,000/day level though our Clarksonsteam now assesses one-year charters at a rather hefty$52,500/day. This adds roughly $0.20 per barrel to the monthlybreak-even requirement, which could impact interest for morefloating storage," Nokta said.
Taking into account vessel hire and other expenses includingbunker fuel and insurance, overall monthly floating storagecosts are estimated anywhere in the region of $1.5 million to$1.8 million per tanker.
Oil traders still stand to make a profit, however, as spotprices for crude are trading below future contracts, in a marketstructure known as contango. The December 2015 Brent contract was trading around $57.40 on Wednesday, $8 a barrelabove the spot price.
"Floating storage is the cherry on the cake for the tankermarket right now, which was already strengthening before thistrend started," said Georgi Slavov, a resource analyst at MarexSpectron in London.
"But the amount of oil now being stored at sea is addingsome froth to tanker rates." (editing by Susan Thomas)
