The red dots seen above in Singapore waters (shown in this live map) show ships either at anchor or barely moving.

These ships are either oil tankers or cargo, which have turned the regional Straits of Malacca into a giant parking lot for Very Large Crude Carriers (VLCC) filled with tens of millions of barrels in combustible cargo.

The Straits of Malacca is one of the world's most important shipping lanes. It carries about a quarter of all seaborne oil primarily from the Persian Gulf headed to China.

Physical crude oil glut

A recent Reuters expose piece on May 19, noted prices for oil futures have jumped by almost a quarter since April this year, as a result of severe supply disruptions caused by triggers such as Canadian wildfires, acts of sabotage in Nigeria and civil war in Libya.

But this perceived shortage might very well be just a perception.

Because what this map shows is that there is -- right before us -- a historic physical crude oil glut, where prices have fallen over 70 percent between 2014 and early 2016 and does not look anywhere near recovering to past highs.

And because there is so much crude and prices are so low, they do not justify being sold but rather kept in storage out at sea.

A fleet of 40 supertankers anchored in coastal waters off Singapore and Malaysia carry about 47.7 million barrels of oil.

One estimate puts this inert glut off Singapore waters as being enough oil to satisfy five working days of demand in China, suggesting recent supply disruptions have not cut oil supply by much.

One culprit of this huge supply has been the Middle East, which has been producing way too much oil as a strategy going forward vying for market share to eclipse rival producer countries to squeeze them out eventually.

Too cheap to be sold

What this means, though, is that there is a mismatch between the physical and paper markets: The oversupply is nowhere near over and that financial traders betting on higher crude oil futures may be in for a surprise correction from the physical market.

As it is, there already appears little incentive to store crude in oil tankers floating out at sea, as the cost is US$40,000 per day.

The only reason to do so is the expectation for prices to rise in the near future to cover the costs of storage.

H/T Reuters, zerohedge.com

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