Oil Contango in Play: Enough oil to supply Brazil for five days is now floating at sea on 5 tankers - hope they have good weather

The price of hiring a supertanker for a month is about 23.7 cents a barrel, based on the Baltic Exchange’s daily rental rate divided by a carrying capacity of 2 million barrels. It was as high as 97.5 cents in January. Companies hiring the vessels also pay other costs such as fuel and insurance.

Between them, the five tankers booked by Vitol, Shell and Gunvor can store about 11 million barrels of crude. That’s enough to supply Brazil for five days, according to data from BP Plc on Bloomberg.

SHOOT: Contango is a pricing scenario where future prices are higher than those for contracts closer to delivery. This also means that you can make investments or bets based on the fairly obvious assumption that prices for oil are heading up. May Brent crude has risen 54 cents trecently to $52.78 a barrel.

"We still view the currency factor as a larger pricing consideration to oil." - Jim Ritterbusch

clipped from www.bloomberg.com April 3 (Bloomberg) -- Vitol Group, Royal Dutch Shell Plc and Gunvor International BV booked supertankers to store oil at sea as plunging shipping rates made the trade potentially more profitable again after a three-month gap, a shipbroker said. Vitol, a closely held oil trader, hired three tankers at $45,000 a day each, capable of carrying a combined 6 million barrels of oil, Athens-based Optima Shipbrokers said today. Gunvor, shipper of a third of Russia’s oil, booked a tanker at the same rate, while Shell, Europe’s largest oil company, hired an ultra large crude carrier at $64,000 a day, Optima said. Four other shipbrokers, all of whom declined to be identified because the information is private, reported the same transactions. The amount of oil stored at sea climbed to the most in at least two decades in January as traders profited from a contango structure where future prices are higher than those for contracts closer to delivery.