Wednesday, January 7, 2009

Oil: Record Inventories at Cushing. And: Oil Traders Seek Another 10 Tankers for Storage

From FT Alphaville:

The latest US stock data has just been released and it’s a whopper of a build at Cushing, Oklahoma- the delivery point for West Texas Intermediate physical barrels which set the WTI Nymex benchmark. The number is currently the most closely watched inventory figure because of the contango in the forward curve and the associated incentive to store crude.

Few analysts would have expected Wednesday’s build of 4.1m to 32.2 mn barrels. The total build documented by the US Energy Information Administration figures was 6.7m to 325.4m barrels. Crude has unsurprisingly come off sharply on the news - WTI down to some $44 per barrel at the last look, off some 7.6 per cent over the session. According to Dow Jones Newswires, total capacity at Cushing is some 45 mn barrels.

All in all it’s a very bearish indicator for crude with inventories across the oil complex building much more than expected:...MORE

From Bloomberg:

Oil traders are seeking as many as 10 supertankers to store crude, potentially taking the amount hoarded at sea to almost five days of European Union demand, according to Frontline Ltd., the largest owner of the vessels.

About 25 of the carriers, each able to hold about 2 million barrels of crude, were already hired for storage. There are enquiries for 5 to 10 more, Jens Martin Jensen, Singapore-based interim chief executive officer of the company’s management unit, said by phone today. Traders are storing crude to take advantage of higher prices for supply in the future.

Thirty-five supertankers represent about 7 percent of the global fleet of very large crude carriers, according to data from London-based Drewry Shipping Consultants Ltd. Storing oil in tankers may buoy rental rates that fell by a record 78 percent last year as slower economic growth sapped demand for energy.

“I’ve never before seen storage demand on this scale,” said Didier Labat, a Paris-based shipbroker at Barry Rogliano Salles who has worked in tanker markets for about 20 years....MORE

See also our posts:

Oil speculation: It's back

Contango Pays Most in Decade as Shell Stores Crude. And: Shell to quit wind projects

Oil: "It’s all about Cushing"