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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (9147)	5/15/2009 10:22:59 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24234

Close to 150 million barrels oil, products stored at sea Thu May 14, 2009 7:41am EDT TOKYO (Reuters) - Oil companies are storing close to 150 million barrels of crude oil and petroleum products at sea, a leading shipbroker said on Thursday. An oil market structure known as contango -- when oil for prompt delivery is cheaper than oil for later delivery -- has made it profitable to buy oil for storage. "Our view is that there is something like just over 100 million barrels of crude oil and probably something like 30 to 40 million barrels of (petroleum) products," said Steve Christy, head of research at E A Gibson Shipbrokers. The forecast for refined products was above some other industry estimates. Weaker freight rates, helped by an oversupply of vessels in the global economic downturn, have also meant oil companies have resorted to leasing ships to store oil. Christy said the increase in ships being used for storage had yet to affect the market for Very Large Crude Carriers (VLCCs), but it would likely boost the market in the short term as contango provides an incentive for traders to buy now and sell later. But he was bearish on the long-term impact of the trading play for shipping companies. "Ultimately contango doesn't last forever, so it does have to end at some point," he said. Trading firms and oil companies look set to rake in bumper profits this year by taking advantage of the cheap freight to float storage in the physical oil markets. (Reporting by James Topham and Chikako Mogi; editing by Sue Thomas) reuters.com