• Oil Traders Looking Again Towards Floating Storage - gCaptain
    http://gcaptain.com/oil-traders-looking-again-towards-floating-storage

    Hep, les gens, c’est le moment de remplir vos piscines ! … de pétrole ;-)

    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.

    Primary and secondary storage is pretty much full,” Bake said in London Wednesday. “It’s probably a good time to be a vessel owner.

    #Super-Contango

    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.

    This has been happening throughout the oil slump using onshore tanks, which are now starting to fill up. Oil stocks at Cushing, the Oklahoma town that calls itself the “pipeline crossroads of the world” and serves as the delivery point of the West Texas Intermediate futures contract, have surged to a record of 64.7 million barrels, or more than 88 percent of working capacity, according to data from the U.S. Department of Energy.

    In the second half, every tank and swimming pool in the world is going to fill,” BP’s Dudley said Wednesday at International Petroleum Week in London, which every year brings together hundreds of people from the oil industry, from producers and refiners to traders and bankers.