Tuesday, October 6, 2009

Does Disappearing Contango Foretell Imports

From the FT Sept.24
"Paul Tossetti, Dallas-based director of oil markets at consultant PFC Energy, estimated that it costs 50 cents to 60 cents each month – $6-$7.20 per year – to store each barrel on a supertanker.
He said the new structure of the market has blunted the appeal of the deals. “If you look at the fundamental economics, it’s not as strong as it used to be,” he added. “I am sure crude is coming off of ships.”
In spite of the reduction, floating storage deals are still popular, shipowners said.
Simpson Spence and Young, the shipping brokerage, estimates that 29 tankers were used at the end of August as floating storage, down from a peak of 56 in April.
Jens Martin Jensen, managing director of Bermuda-based Frontline, the world’s largest operator of supertankers, also confirmed a drop in crude floating storage.
Mark Jenkins, a shipping analyst at SSY in London, said that floating storage deals would drop further towards the historical level of five to seven tankers next year.
“We do not anticipate a significant amount of floating storage as we move into 2010,” he said."

Of course the really huge spreads sold were out to Z9 .

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