The world is so awash with crude, the boss of BP Plc said people will be filling their “swimming pools” with it by the end of the year.
While
the company’s Chief Executive Officer Bob Dudley bemoaned this bearish
outlook for oil, traders were eyeing a potentially profitable
opportunity: turning supertankers into temporary floating storage
facilities.
Trading houses including Vitol Group, Koch Supply & Trading LP and Glencore Plc, plus the in-house trading arms of BP and Royal Dutch Shell Plc, collectively made billions of dollars from 2008 to 2009 stockpiling crude at sea.
At the peak of the floating storage spree, sheltered anchorages in the North Sea, the Persian Gulf, the Singapore Strait and off South Africa each hosted dozens of supertankers.
Chris Bake, a senior executive at Vitol, the world’s largest independent oil trader, gave the clearest indication yet this week that traders are considering the same strategy again.
Floating storage is profitable when the market reaches a condition traders call a “super-contango.” In a contango market, prices of oil for delivery today are lower than those in future months. Buyers with access to storage can fill up their tanks with cheap crude and sell higher-priced futures contracts to lock in a profit
Trading houses including Vitol Group, Koch Supply & Trading LP and Glencore Plc, plus the in-house trading arms of BP and Royal Dutch Shell Plc, collectively made billions of dollars from 2008 to 2009 stockpiling crude at sea.
At the peak of the floating storage spree, sheltered anchorages in the North Sea, the Persian Gulf, the Singapore Strait and off South Africa each hosted dozens of supertankers.
Chris Bake, a senior executive at Vitol, the world’s largest independent oil trader, gave the clearest indication yet this week that traders are considering the same strategy again.
Floating storage is profitable when the market reaches a condition traders call a “super-contango.” In a contango market, prices of oil for delivery today are lower than those in future months. Buyers with access to storage can fill up their tanks with cheap crude and sell higher-priced futures contracts to lock in a profit
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