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Vet67to82 (< 20)

Crude Supply and Shipping

Recs

71

December 17, 2008 – Comments (1) | RELATED TICKERS: DHT , FRO , SFL

*  The market tribulatiions have knocked crude prices out of whack, with the near months pressured by lack of demand, etc vs the 2009 futures at $12 - 15/bbl more.  It has been reported that Koch and Shell are taking advantage of the price difference by buying crude and storing it on tankers. 

*  Tankers sitting in port as storage containers aren't competing for open contracts to deliver crude around the world.   Fewer ships to transport crude favor ship owners.  A ship sitting in port burns how much bunker fuel ... ? 

Buyers: Depending on internal funding, lets try to calculate how many ships that might be.  For economy and profit I'd want to use vlcc's ... 1 to 2 million barrels of crude.  So, if crude is $42/bbl ... 1 vlcc  could be holding $42 - 84 million dollars of crude to be foward sold at next year's futures price.  Maybe 15 - 20 ships?    

 Sellers: if you're Saudia Arabia, and it only costs you $2 per barrel to pump crude from the ground, that same vlcc holding $2 to 4 million in Saudi crude could be worth $12 - 15/bbl more in 2009.  So, if you're Saudi Arabia, why not just reduce production and leave it in the ground ... look at the political picture.  Iran and Venezuela are, or were, sabre rattling at $147/bbl crude.  What have you heard, crude down to $40 - 50/bbl, from them lately ... not a peep ??  So, maybe 20 - 30 ships more ...       

  Which is really good for the shipping companies:  DHT, FRO, NAT, SFL, VLCCF, etc     

1 Comments – Post Your Own

#1) On December 17, 2008 at 9:15 AM, Vet67to82 (< 20) wrote:

Hot off the presses:

  DOW JONES NEWSWIRES

Supertankers are being used to store about 50 million barrels of oil around the world, in a sign of supply outstripping demand as the global economy slows, the Financial Times reports Tuesday. Jens Martin Jensens, managing director of Frontline Ltd. (FRO.LN), the world's largest operator of supertankers, says as many as 25 supertankers - each holding about 2 million barrels - are being used for floating storage. Other traders suggest a similar number, pointing to companies such as BP PLC (BP) and Royal Dutch Shell PLC (RDSB) and traders such as Vitol and Koch as the holders of the oil.
Story at http://www.ft.com/cms/s/0/d638d9fc-caf7-11dd-87d7-000077b07658.html?nclick_check=1

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