Posted on 01/15/2009 9:40:19 PM PST by TigerLikesRooster
January 16, 2009
Morgan Stanley to secure supertanker to store crude oil
Leo Lewis, Asia Business Correspondent
Shipping brokers in Tokyo say that Morgan Stanley has joined a growing international scramble to secure an oil supertanker and use it to store millions of barrels of crude in what commodity dealers believe may be the “trade of the year”.
The rush to snap-up supertankers and profit from the huge “contango” spreads between the falling crude spot price and rising futures price comes amid dire warnings by analysts over the future of the wider shipping industry.
Massive overcapacity and slumping global trade are expected to trigger a second collapse in cargo rates, which already plunged nearly 94 per cent last year. Exports from China, Taiwan, Korea and Japan are falling fast and expected to drop further at a pace not seen since the early 1980s.
Sources throughout the Asian shipping sector say that despite a recent rally in container and dry bulk rates, 2009 could see dozens of firms going bust. A spokesman for Japan’s largest shipping line, Nippon Yusen, predicted prolonged difficulties for cargo rates as the global economy falters.
(Excerpt) Read more at business.timesonline.co.uk ...
they must think oil will go up significantly........
And if it doesn’t you and me get to bail them out
Expecting an Isreaeli raid on Iran?
We can round all of them on the deck of a supertanker, and set it on fire. :-)
Kill ‘em all and God will sort them out even though they are atheists .....
ACTUALLY one must remember that Morgan Stanley invented credit default swaps so as to free up the reserves that were then required. The reserves are then put out to earn some real money in derivatives
Last month's action, and this month's too, are due SOLELY -- and good luck to you if you don't believe this -- to the enormous amount of crude stored at Cushing OK. This situation may persist for some time, at mimimum a month, and the huge contango in crude (what's a contango, you ask? Gee, I thought you knew.) will persist.
Here's a hint, boyo. It's nothing -- NOTHING -- to do with ''speculation''. It's an old-fashioned notion, called 'IMMEDIATE supply vs. demand''.
The cause of the price action that you correctly note last month, and which is occurring this month, too, is directly the insufficiency of storage (hence people renting tankers to store), because they want to play the storage/delivery game, which, if one can play it, is indeed enormously profitable.
However, the nameplate storage capacity at Cushing (which, for you uninformed types, is the ONLY place that matters in the US) is 44 MM bbls. The actual max capacity is more on the order of 38 MM bbls. We're at, as of last Wednesday, about 34.4 MM bbls. In short, storage is at a premium, and here's what happens.
Joe Spec buys front-month crude, intending to store it (somewhere) and sell it back next month. Likely as not, he's already sold next-month futures, intending to deliver cash crude against his short sale next month. BAD luck, the poor chap can't GET storage, and so, as front-month nears expiration, must sell back his front-month futures and, again, likely enough, BUY back his second-month future.
Put several thousand such Joe Specs together, and you see what is occurring in crude right now. There's enormous selling pressure on front futures, and none, or even buying pressure on 2nd and 3rd month futures...and the smart boys (that would be evil chaps such as I and my colleagues) are profiting handsomely.
DO keep talking, please. I can definitely use the profits.
Ping
Ping
Ping, gents. You might find this thread rather amusing.
...and on another note, in a post two or three months ago I compared volatility in oil to that on foreign currency exchange, and you pointed out that the foreign currency exchange was even more volatile, without evidence of price fixing.
Subsequent following of financial news stories on my part confirm that.
I stand corrected on the volatility of the forex markets.
In the meantime -- please explain how/why the price for crude is falling (from $50/bbl a couple of weeks ago, to $35 or so today) and yet the price at the pump *spiked*. This seems counterintuitive, and is I believe why some are tempted to blame "speculators"...my own suspicion is that the oil companies have just ratcheted down the production at refineries.
Cheers!
Sounds like some people got caught hoarding $140/bbl oil? Was that crisis manufactured and now there is a glut?
Pray for W, America and Our Freedom Fighters
Because you are looking at too small a time window. Prior to that Oil was rising with gasoline hardly moving. When you look at the longer view, it makes more sense as gasoline price get more in line with oil.
Gasoline is not as volatile in price as crude oil. It doesn't follow every single couple day movement, just the overall trends.
Isn’t this direct evidence of commodity price manipulation? Causing a commodity to be withheld from the market to drive up the price.
The gasoline price is fast to rise when crude goes up but sticky going down when crude price subsides.
Go look at that last chart again.
Is gasoline price sticky going down?
Yes or no will suffice
Last chart is interesting
At some local markets, yes.
Overall average, no.
You can pick a few select time frames to argue either direction, but I don't see the overall tends following that claim.
If you want to do more specific comparisons, I think the best set of free data is available at the Department of Energy's EIA web site.
Topics for Petroleum Prices
http://tonto.eia.doe.gov/dnav/pet/pet_pri_top.asp
Gasoline is sticky going down is the general wisdom
You charts say differently. I thank you very much for indulging me
Because people only take real notice of those times effecting them badly and ignore the times that it doesn't, in my opinion.
Motor gasoline is gaining relative to crude because it had fallen a terrific amount, again, relative to crude. It had fallen so far, in fact, that refining margins for motor gasoline, aka ''the gas crack'', were negative; refiners were losing money on every barrel of gasoline produced for about 3 months, until sometime this past week.
Speculation has nothing whatever to do with the recent relative rise in motor gasoline. All the demand destruction is priced into the mkt by now, and the mkt is correcting, just as it always does when left alone.
The situation right now in the two front futures months of crude is an aberrant one involving excess supply at Cushing OK, and this odd situation too will correct over time...but nobody's quite ready to say how much time will be required. Meantime, expect the gas crack to return toward somewhere around historical norms, say $3-7/bbl, slowly this year. Probably be there by ''driving season''. Make no mistake, this will **not** be a straight-line process; the gas crack will bounce all over the place this year, but net-net it should be higher at the end of the year, bar another economic earthquake.
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