The Saudis have stated they are willing to increase production if new buyers meet their terms. This rout isn't over yet.
What is the approx ballpark cost per month per bbl of offshore oil storage + finance charges? What about ballpark cost per bbl of tanker oil storage + finance charges?
There is no simple answer to either of those questions, unfortunately. It depends on where the crude originates (North Sea, West Africa, Arab Gulf, Baltic, Med, Black Sea) and the time frame under consideration. Tanker rates are mostly backwardated around the world at the moment. Spot rates in the AG are trading around ~$1.20/bbl for 30 days while Jan loadings are trading ~$.915/bbl, Feb ~$.715/bbl, Mar ~$.61/bbl. WAF spot rates are closing out ~1.48/bbl, Jan is ~1.58/bbl, Feb ~$1.51/bbl, and you get the idea. Add to that 2-4% of the cargo value for ancillary, loss, breakup charges, insurance, and financing. It depends on the size of the tanker, the available tonnage in the region, and the credit rating of the physical trader. And these prices fluctuate daily if not hourly. On-land storage is cheaper and filling up quickly. Current spare capacity in the US is concentrated in Padd 3 and Cushing tank farms. The WTI spreads are already supporting on-land storage, however they need to widen much further to support Jones Act vessels storing crude in the USGC/EC for re-delivery into US ports. VLCCs in the AG and Suezmaxs in the Baltic and Med will be the first to be utilized as storage in my opinion. The Dubai curve is marginally supportive and Brent not far behind.
Reuters: Med Crude-Urals weakest since July on abundant supplies Platts: Nigerian crudes slide further on weak demand amid glut of cargoes
Fascinating thread. Ogarbitrage, how are you playing this move in crude? Until today, my rudimentary plan was to wait until oil dropped and then started to move toward backwardation before buying a few speculative long oil futures contracts. I'm now looking at possible lower risk/return financial instruments on the short side of the trade. Suggestions welcome. I've bookmarked this thread and will be bookmarking a lot of Ogarbitrage's links to pull data from. I know that marine link is going to suck up a ton of my time.
I don't think we will see a backwardated crude market for several years. We just experienced a regime change in the term structure and this supply glut will last for awhile. I am long crude puts and getting extensively long tanker equities, in particular Frontline, Teekay, and Nordic American. I think Frontline especially is one of the most compelling investments I have seen in my career to date. It's the single largest position I have ever had in terms of the number of shares I control via calls and outright equity.