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RE: Oil Traders Seek +10 Crude Supertankers Storage

Home Forums Refining Community Refinery News Fw: Venezuela OPEC crude cuts US/China 189MBD – non-event? RE: Oil Traders Seek +10 Crude Supertankers Storage


Charles Randall

Here is update on VLCC’s I mentioned as being used as floating storage not only by Iraq in mid 2008 and now Saudi’s/MidEast but being joined now by other Crude traders – who are all betting on contango / higher crude prices over the Dec $61/Bbl purchase value.
The immediate result is that nearly 35 supertankers already loaded/loading represent nearly 7-10% of Global fleet and has been spiking freight rates at time when they should be falling due to over-surplus of empty ships not moving product anywhere. 
I wish someone would put spike on these guys doing this sort of speculation – but since they are going to be using hedged physical barrels they won’t have lot exposure (depending on what future value they locked hedge to) and the resulting spike from freight will help offset some demurrage expense and give them the ability to immediately take advantage in price & demand spike in the market. Their surprise might come from the fact that with big downturn in economy – if crude/product demand doesnt change for peak period between Feb-Jun 2009 time frame it isn’t going to happen unless it is driven by war, weather or regional crisis of supply (i.e. other than fundamental demand driven). I am going to be hoping none of the above happens and we are in position to watch these guys all get flushed away from their crude speculation so they will stop trying to screw with real market.
You should advise your company crude traders they need lock down some forward freight rates before these idiots make it lot worse on everyone (I am thinking of big 2008 log-jam/bulk freight price spike that resulted from bulk panamex vessels locked around Australia trying to get to load coal exports for nearly 1-3 months). 

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