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il Traders Hire Tanks on Tiny Island to Profit From Global Glut

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  • Glencore hires storage tanks in St. Lucia to stow oil
  • Prices close to making floating storage financially viable
  • Glencore Plc hired tanks at the island’s only oil terminal to stow crude, joining 
    “Contango opportunities are emerging,” Ian Taylor, chief executive officer of 
    While the oil market has been in contango since August 2014, in the last month 

    The difference between Brent crude for immediate delivery and the price a year in the future has more more than doubled since July
    The difference between Brent crude for immediate delivery and the price a year in the future has more 

    The spread has widened as refiners enter into their maintenance season before
    Globally, Goldman Sachs Group Inc. estimates crude oil supply is outstripping 

    Tanker Tracking

    Glencore sent the medium-size Everglades tanker full of North Sea crude to St 
    At today’s price levels, traders can store crude onshore, at terminals like St. 
    Nonetheless, there are signs that floating storage could become economic. 
    “If it doesn’t happen this fall, then it’s going to happen next spring unless 

    Oman Crude

    E.A. Gibson Shipbrokers Ltd. estimates that contango levels are getting closer
    The main obstacle to contango trades is the cost of storage, both onshore and 
    The demand for storage is a boon for the world’s largest tanking companies, 
    Even so, the stronger contango signals a boom for oil traders if history is any 
    Vitol had record income of $2.28 billion in 2009, during the last big contango,
  •  up from $1.36 billion in 2008, according to the company’s accounts. BP Plc, which
  •  has a large trading division, said it made an extra $350 million in oil trading during the first quarter, in part thanks to a strong contango.
  • guide.
  • including Vopak NV, Kinder Morgan Inc., Oiltanking GmbH and Magellan 
  • Midstream Partners LP.
  • offshore. In 2008 and 2009, the last time the oil market was as oversupplied as 
  • today, the storage companies and shipping firms were slow to increase rates, 
  • allowing the traders who used their tanks to take an unusually large slice of the
  • contango profit. This time, the split between tank owners and traders is more even.
  •  to allowing floating storage for some Middle East oil, such as Oman crude. The 
  • 3-month contango on Oman crude near $3 per barrel is almost enough to cover 
  • the $3.10 a barrel it estimates would cost to hire a tanker for floating storage.
  • something gives on supply-demand,” Seth Kleinman, head of energy strategy at 
  • Citigroup Inc. in London, said by phone.
  • Paddy Rodgers, CEO of Euronav, one of the world’s largest owners of oil 
  • supertankers said that oil is likely to be stored at sea over the next four to five 
  • months.
  • Lucia and Saldanha Bay and make money. The contango isn’t strong enough yet 
  • to allow the use of oil tankers as floating storage facilities, traders said.
  • Lucia on Sept. 9, according to ship-tracking data compiled by Bloomberg. Its
  •  rival Vitol sent supertanker Front Ariake, laden with Nigerian crude, to an 
  • onshore storage facility in Saldanha Bay in South Africa on Aug. 25.
  • demand by more almost 2 million barrels a day, putting increasing pressure on 
  • the world’s storage capacity.
  •  the northern hemisphere’s winter, reducing crude oil intake. At the same time,
  •  supplies in the Atlantic basin from producers in the North Sea and West Africa
  •  have risen to the highest in three years, forcing traders to find a home for millions 
  • of barrels.
  • more than doubled since July
  • prices have moved in a direction that makes the trade more profitable. The price 
  • difference between a Brent oil contract for immediate delivery, the global 
  • benchmark, and one-year forward stood at minus $7.82 a barrel on Tuesday, 
  • more than double its level in mid-July.
  • Vitol, the world’s largest independent oil trader, said in an interview earlier this 
  • month.
  • Vitol Group, people familiar with the matter said last week. They’re responding to
  •  the market’s deepening contango, a situation where prices today are lower than 
  • those in future months, allowing traders with access to storage to lock in a profit. 
  • From St. Lucia to South Africa to Rotterdam, they’re seizing the opportunity.


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