Oil storage cost

Discussion in 'Commodity Futures' started by meir13, Feb 10, 2009.

  1. meir13


    Do you know how much is does cost storage of physical oil? From what I know, we are looking at 75c/barrel for each month.
  2. Even though it is cheap you need to be a big player to get into the game.
  3. there is no static cost to store oil, there are way too many variables.

    If you didn't already have a contract for space and tried to buy space now, you would have to pay the largest amount that has ever been charged to get a contract. The people who own the space are well versed in the spreads and will capture the lions share of the spread.

    The guys making coin on space right now are the ones that hold long term contracts and have had them for some time. (before the market went deep contango).

    For future reference, there are no standard costs in anything related to energy, from royalties to drilling costs, everything is negotiated and never stays static.
  4. 1) It's always more than what you believe "it" should be.
    2) You have to be careful when attempting to deliver a commodity that has been in storage "too long". There can be degradation issues. (Somebody correct me if I'm wrong on that as it relates to crude oil.) :cool:
  5. Refined products like gasoline and diesel degrade depending on where, how and for how long they are stored. Crude does not.
  6. Dax,

    Won't crude lose a portion of its volatiles if stored improperly?
  7. If kept in an unsealed container the volatiles may well evaporate leaving a much poorer quality crude. Crude wil not degrade if stored correctly, where as gasoline regardless of how it is stored will start to degrade after about 40 days.
  8. If I am a trader why should I care? I pay for storage costs up front, that is the storage company's problem. Don't you think so?