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flyonthewallzz6 months ago

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http://www.sqwalk.com/blog2009/001609.html

"The $100 per barrel drop in crude oil prices since July, to around $50, has pushed the market into an unusually sharp contango -- a scenario where the cost of oil today is much lower than the price of oil in the future.
Meanwhile, the global economic crisis has led to a more than halving in the cost of chartering oil tankers since last year.
This combination has created an opportunity to buy oil, simultaneously sell it for future delivery to lock in a profit, while storing the oil at sea until the delivery date.
In total, close to 100 million barrels of crude are being stored offshore, compared to none a year ago, Jens Martin Jensen, acting chief executive of Frontline, one of the world's biggest independent oil tanker owners, said last week."

This article is worth reading.

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  beavith16 months ago
  
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  it is a good article... props.
  
  ...This combination has created an opportunity to buy oil, simultaneously sell it for future delivery to lock in a profit, while storing the oil at sea until the delivery date...
  
  FWIW, the price isn't really locked. another sharp drop in prices, like we had through the fall of 08, and the guy that holds that future is left holding the bag and garnering a loss.
  
  this whole current price of oil is where institutions are stashing cash, counting on getting into oil before the big recovery., where each buyer is bidding the price up in a ratchet style.
  
  thing is, i don't get where anyone should be optimstiic for any recovery. the pundits talk about a strong recovery or a weak economy. i have no idea where they get that from. the banks that are holding trillions of CDO and CDS $ are STILL broke. liquidity is only good as long as the Gov't and europeans are pumping cash into the world economy.
  
  what would it take to kick us over another cliff? i don't think it'd take much.
  
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    flyonthewallzz6 months ago
    
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    I really do not understand the futures market thing as well as I should.
    But as I understand it...at some point the holder has to take physical delivery.
    I may have it wrong ...but I was under the impression that traders have to unload what they have to someone capable of taking delivery before the deadline hits.
    The more I look at differant industries, it seems that the companies are owned by the same list of major holders. I have to wonder what these bankers know about the buisnesses they own.
    I can see why they would have such false optimism. They are the ones that have benifited the most from the increase in government spending. Most of the money AIG got went directly to that same list of holders.
    According to the monthy treasury report Obama has spent $371 Blllion more than Bush did in the comparable period. (fiscal year began Oct. 1 so that represents 3/4).
    $135 billon of that spending was the TARP.
    I think only a very few individuals benifit from the radical fluctuations.
    
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