Frontline says roughly 80 mln bbls oil stored at sea

[Joanne98]

Source: Reuters


LONDON, Jan 16 (Reuters) - Norway's Frontline (FRO.OL: Quote, Profile, Research), one of the world's biggest oil tanker owners, said on Friday oil firms were storing "about" 80 million barrels of crude oil at sea, possibly the highest in a quarter of a century.

The figure is the highest storage estimate reported to date. Ship broking houses, banks that trade oil and other industry sources believe the total is considerably lower.

"We think it's about 80 million barrels...but we are not 100 percent certain," the acting chief executive officer Martin Jensen told Reuters by telephone from Singapore.

Crude freight rates have been supported on top export routes by the slew of storage bookings. Tanker firms' profits are tied to the underlying cost of oil freight.

Mike Wittner of Societe Generale said the Frontline figure fitted the broader oil market picture.



Read more: http://in.reuters.com/article/oilRpt/idINLG38017720090116

[kirby]

1. This should be illegal...

This is market manipulation. The same folks buying the oil and storing it, are the folks buying/selling oil futures and derivatives. They are actively manipulating the supply/demand.

[naaman fletcher]

20. not really...

This doesn't happen a lot, it happens in the rare circumstances when the oil market is in contango. Contango means that the futures price is higher than the spot price. What that means is that, for whatever reason, and there are various ones, oil is more heavily demanded in the markets one month from now than it is now. The market thus provides an incentive to store oil now, in order to sell it later. So, these companies buy spot oil, and sell futures, then store the oil to deliver on the futures date. Yes, that increases the price today, but it decreases the price in the future.

If you prohibited this somehow (and you couldn't, other countries would just do it beyond our borders) then yes you would decrease the price now, but at the expense of oil being even higher in the future.

Don't get me wrong, I believe the run up in oil was purely (or mostly, anyway) the result of speculation, but there is nothing wrong with this whatsoever, and it actually serves to moderate prices over time.

[Alhena]

2. I'm starting to like the Somali pirates a lot more

[Joanne98]

3. Me too.

[Warpy]

4. That was happening during the height of the price bubble

because people looked at $4.00/gallon and simply stopped driving unless the trip was absolutely necessary. Demand was low even as the futures price stayed at record levels, with full tankers backed up in the Persian Gulf and outside ports like Houston.

That's one of the things that focused attention on the role of hedge funds in manipulating commodities prices across the board, the fact that the price stayed high even as the world was drowning in oil supply.

[xchrom]

5. what the fuck?

how the fuck do the cops -- all over the world -- let any of this get away?

is just everyone in power the globe over out to fuck the little guy?

[FiveGoodMen]

7. "is just everyone in power the globe over out to fuck the little guy?"

Yes.

And as long as the little guy is content to be a "values voter" it will surely continue.

Collectively, we should be able to turn this around, but pundits (RW PR), Newspaper editors (more RW PR), TV preachers (Satan's minions), AmericanIdolBigBrotherWhoWantsToDancingWithET (constant distractions) have derailed this country completely.

The worst are the preachers. Many people are just afraid to disagree with them.

[Taverner]

9. As long as boys can't kiss - then we can all go in the poorhouse :)

[FiveGoodMen]

11. You notice, though, how the propagandists are a LONG way from the poorhouse themselves!

(And some of them are running around kissing boys until they get caught!)

[Incitatus]

16. because they ultimately get their orders (laws to enforce) from the ones fucking the rest of us. nt

"is just everyone in power the globe over out to fuck the little guy?" pretty much

[Strelnikov_]

6. Oh boy, one days supply n/t

[teotwawki]

13. yeah, that's what I was thinking too

[Delphinus]

19. Me three. n/t

[Gregorian]

14. Thank you. I see you've learned well.

Now I can go back to watching 1984 instead of calculating just how many pathetic days of oil burning that would take, at 20 million barrels per day, just for us.


Damn, 1984 is incredible. It gets better each time. But I digress.


Yes, as we grow in world population and energy use, the amount of nonrenewable energy need increases beyond all energy use that the world has ever used. And in shorter time periods. So we cannot grow any longer. And we cannot consume any longer. It all has to be renewable. Well, it doesn't have to be. But the alternative is not very nice. I guess I should say it is double plus bad. :)

[gasperc]

8. Well, at $38, investors are buying and holding

so they can fuck us, I mean, make a profit later in the year.

[NOW tense]

10. Is this why prices artificially climbed over the summer?

[Lorien]

18. Yes

The same greedy bastards we bailed out are gouging us. :grr:

[naaman fletcher]

21. No..

prices were high over the summer due to speculation driving up the price of oil both on the spot and the futures markets. What is happening here is due not to that, but the rare circumstances when the futures prices are higher than spot prices. When the structure of the futures market makes it profitable to buy now, store, and at the same time lock in a profitable futures sale, prices are actually being moderated over time.

Don't get me wrong.. the oil run up was entirely (or mostly) due to speculators out of control, but this, here, has nothing to do with that.

[CubicleGuy]

12. Sounds like Superman III

Didn't Gus Gorman (Richard Prior, at the behest of his evil boss played by that old Napoleon Solo dude) order a bunch of oil tankers to just sit around in the middle of the ocean at some point in "Superman III"?

Sounds like the same thing to me.

[freedomnorth]

15. I hope they keep her at sea too...

:hi:

[Lorien]

17. Yeah, like that's not an environmental disaster waiting to happen

we ought to withhold bailout funds from the bank until they bring them into port!

[roamer65]

22. Demand is falling this fast, folks.

We are only about 2-3% away from the capacity utilization lows of the 1981-1982 recession. This is either going to be known as the Great Recession or The Second Great Depression. It all depends on government fiscal policy/stimulus now.