Dr. C.

Crude Reality: How Long Can Oil Stay Down?

"Vast number of tankers full of oil"

Yes, there are tankers being hired to act as floating storage facilities. How much oil is stored at sea?

"Oil companies and traders are storing 80 million barrels of crude oil at sea, the most in at least 20 years, according to Jens Martin Jensen, interim chief executive of the management unit of Frontline Ltd., the world's largest supertanker owner."

This article also states that...

"The cost of hiring supertankers to collect crude oil from the Middle East jumped as the biggest oil-storage program at sea in at least two decades eliminated the supply of ships available for deliveries."

Source:
www.canada.com/calgary...

So this suggests that the 80 million barrels is just about the maximum tanker storage space available and the cost of leasing these ships are rising.




So how much is 80 million barrels of crude?

EIA estimates global demand for 2009 to be about 86 mbd.

Source:
uk.reuters.com/article...


So we see that the "Vast number of tankers full of oil" won't hold enough oil for 1 days' global consumption.

Sorry - I'm still not convinced that the current "glut" will have a significant impact on price over the next year or two.

I may be wrong - but then, I may be right.

I'm long DXO with a 1-2 year planned holding period
Most of the position was put in place on days oil traded below $40






On Jan 15 08:58 AM Mmarrkk wrote:

> Dr. C: look offshore! Vast number of tankers full of oil are sitting
> on the high seas.