47012
Oil Traders See Glimmer of Profit in Storing Crude at Sea
Energy

Oil Traders See Glimmer of Profit in Storing Crude at Sea

Oil traders once again believe it is worth heading out to sea.
The market structure for Brent crude, the benchmark for more than half the world’s oil, now makes it viable to store supplies in a ship to potentially lock in profits on a sale six months later, according to a Bloomberg survey of six traders and analysts.
In August, cargoes for later delivery have averaged $2.78 a barrel higher than prompt shipments, more than covering the cost to hire a tanker for storage for half a year.
This discount of near-term supplies versus cargoes for later, known as contango, was as little as 70 cents in April, when shipping costs were higher as well, making it unlikely then that traders could potentially profit from floating storage.  But with front-month futures sliding since early June and tumbling into a bear market this month amid swelling onshore stockpiles, the market structure has changed while freight has also become cheaper.
“Demand from refineries looks set to pick up toward the end of the year as more units return from peak maintenance season,” said Nevyn Nah, a Singapore-based analyst at industry consultant Energy Aspects Ltd. “It’s not a bad time for traders to start thinking about floating certain grades of oil as the current Brent structure and freight are helping their cause.”
A six-month time charter on a Very Large Crude Carrier that can carry 2 million barrels of oil would cost $25,000 to $28,000 a day, according to two shipbrokers and a tanker charterer. That’s equivalent to $2.25 to $2.52 a barrel. October Brent futures traded at $43.76 a barrel on Friday, lower than the April 2017 contact at $46.23 on the London-based ICE Futures Europe exchange.
A drop in freight rates as new ships enter the market and shrinking availability of traditional storage options “may be prompting creative approaches to holding on to oil,” industry consultant JBC Energy GmbH said in a report last month.
Additionally, the deepening contango has made floating storage relatively attractive for some companies, it said.

 

Short URL : http://goo.gl/EgaXA6
  1. http://goo.gl/MzMLOz
  • http://goo.gl/WC5JeH
  • http://goo.gl/nsBbue
  • http://goo.gl/1BIPbf
  • http://goo.gl/htxuVF

You can also read ...

Oil futures are sliding on expectation of higher Russian and Saudi production.
US President Donald Trump's unilateral decision to withdraw...
1st Platform of Iran's South Pars Phase 22 Installed
In line with plans to boost gas output from South Pars Gas...
Aramco IPO Likely In 2019
Saudi Aramco’s much-hyped initial public offering is “most...
Record Conformity Level in OPEC, Non-OPEC Output Cut
The 24 OPEC and non-OPEC producing countries participating in...
Japan Refiners Undecided on Iran Import
Japanese oil refiners will likely take a few months to decide...
The Iranian government provides power firms’ with the US dollar  at  42,000 rials.
Iran’s rial devaluation against the US dollar is not expected...
Iranian Crude at $76.6 pb
Iran's crude oil prices continued to advance in the week to...

Trending

Googleplus