/biz/ - Business & Finance

>>18622161
Tanker rates themselves move with the oil contango.
Today the oil contango between the june contract and the september contract is 12 dollars.
A VLCC stores a bit above 2 million barrels, let's say 2 to be conservative.
If you buy the 2 million barrels in the june contract now and sell short the september one, you'll have 24 million dollars in your hand.
This is enough to pay 266000/day for 90 days to rent a tanker. Thus the price to actually rent a tanker for 90 days will not be above that but close to that price.
When land storage becomes widely available, a lot of traders will start to make this trade and will push the spread down.
Now as said, normal rates are 40k/day for a VLCC (this is for transportation purposes) or differently put, 2 cents/day/barrel or put yet another way, 60 cents/day/barrel.
Whenever the spread between the current contract and a future contract is bigger than this, traders will want to start bidding on tankers, trying to outbid those that just want tankers for transportation and tanker rates will be higher than normal.
I think we should keep an eye on the spread between the contracts and when these spreads narrow, then this will mean that tankers rate will drop and this MIGHT mean that your tanker stock will drop as well.

However, if say a tanker company is now raking in the cash 5 times as fast as usual and this situation holds for a month or two, these profits might not get priced in by the market in the same timeframe.