Contango is back

iflyjetzzz · Jan 8, 2015

Ogarbitrage, the $40K/day rate was for VLCCs; about 2 million barrels, not the ULCCs. That's a cost of $7.30/bbl/yr on a full year rate. It looks like a marginally profitable trade at the moment. What's happening with spot prices?

ogarbitrage · Jan 8, 2015

iflyjetzzz said:
Ogarbitrage, the $40K/day rate was for VLCCs; about 2 million barrels, not the ULCCs. That's a cost of $7.30/bbl/yr on a full year rate. It looks like a marginally profitable trade at the moment. What's happening with spot prices?

I took the day rate as a cap for both ULCC and VLCC fleets. Economies of scale would suggest a better rate for the ULCC at 3mm bbls. As the most economical it was probably the first to reach an open arb. TI-O will more than likely take delivery of five 600k Brent lots, sit idle against a dock somewhere in Rotterdam, and sold back into the Brent complex in 12 months.

ULCC/VLCCs now, Suezmax fleet will be next.

ogarbitrage · Jan 8, 2015

South Sudan's Feb Dar Blend crude oil exports set to rise 4% on month to 4.8 mil barrels

Platts said:
A total of eight 600,000-barrel cargoes are scheduled for lifting in February, compared with four 1 million barrel and one 600,000 barrel cargoes in January, the source said.

...

Apart from the three cargoes, South Sudan's Ministry of Petroleum and Mining is expected to offer a total of 3 million barrels of Dar Blend crude for February, including a 600,000-barrel cargo it jointly holds with other stakeholders. The ministry had offered 2.6 million barrels of Dar Blend crude for January.

More WAF supply hitting the Feb market.

ogarbitrage · Jan 9, 2015

Only 1.6 pct of world's oil production at risk at $40 -WoodMackenzie

nemesis45 · Jan 9, 2015

I love contango.
Will be fun to trade the calendars now.

iflyjetzzz · Jan 9, 2015

nemesis45 said:
I love contango.
Will be fun to trade the calendars now.

? Could you explain? I've traded a lot of stuff, but not much oil. I'm sure that there are much smarter ways to trade oil than what I'm doing.

nemesis45 · Jan 9, 2015

calendar is the difference between two oil futures contracts.
Can be traded on CME/ICE

iflyjetzzz · Jan 9, 2015

I've been trading June contracts. What's the benefit of trading more than one contract?

ogarbitrage · Jan 9, 2015

Less margin and less risk than an outright contract.

ogarbitrage · Jan 9, 2015

Middle East Crude-Oman, Qatar Marine under pressure

BusinessRecorder said:
Oman continued to weaken in the Middle East crude market on Friday, weighed down by a supply glut and poor demand from refiners entering maintenance season.

BusinessRecorder said:
Earlier this week, ADNOC lowered the differential for Upper Zakum, a grade of similar quality, against Dubai crude by 76 cents a barrel.

Med Crude-Urals in Baltic near parity with Med for first time since Sept

Reuters said:
Russia's main export grade Urals strengthened in the Baltic on Friday, rising to around parity with cargoes in the south for the first time since September, as traders weighed rising supplies of sour barrels in the Mediterranean.

...

Traders said large volumes of sour barrels like Iraq's Basrah and Kirkuk crudes were making it into the Mediterranean, weighing on Urals values.

The North/South sour arb has closed.

Reuters said:
Concerns about the supply of lighter grades in the south has also eased as Azerbaijan's loading programme next month is seen being the highest in over a year, though Libya's exports have fallen sharply as the North African country slips towards all out civil war.

...

On Thursday, a preliminary loading programme for Azeri Light oil from the Turkish port of Ceyhan showed volumes rising to 821,000 barrels per day in February from 742,000 bpd in January.