LONDON: Shipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators who want to store oil and bet they can sell it later in the year for a profit.
Su's Taipei-based company, TMT Co Ltd, will lease out its two-million-barrel vessels at below-market prices in return for a share of any profit his customers make on the trade in oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said.
"The oil price is very low," Su, founder and chief executive officer of TMT, said in an interview here on Thursday. "We get a lot of enquiries" about storing cargoes, he said.
Rather than buy crude now, store it and sell futures contracts to lock in a profit, Su said he thinks the trade will make even more money by simply purchasing the oil and storing it offshore. The investor sells it when crude prices rally later, he said.
Oil companies such as BP and banks including Citigroup, through its Phibro LLC unit, have stored as much as 80 million barrels of crude at sea, seeking to profit from the spread between immediate supply and futures. The price spread, known as a contango, narrowed for some grades this month, reducing opportunities for the trade.
TMT will help investors secure cargoes by introducing them to oil traders, Su said. TMT may store some cargoes in the Persian Gulf at cheaper prices on its four single-hull supertankers and deliver them in vessels with two hulls, he said.
The average price of storing two million barrels of oil on a tanker is about US$57,500 (US$1 = RM3.61) a day, depending on the duration of the contract, the quality of the ship and its location, according to data from London-based shipbroker Galbraith's Ltd. That works out to 86 US cents a barrel a month. Traders also have to pay insurance and financing costs.
Crude oil traded on the New York Mercantile Exchange, more than US$100 a barrel below its July 2008 record, has advanced 26 per cent from its low on January 20 as the Organisation of Petroleum Exporting Countries curbs output.
The cost of shipping Saudi Arabian crude to Japan, the tanker industry benchmark, has slumped for 10 consecutive trading sessions, according to the London-based Baltic Exchange.
The measure, updated once a day, fell 6 per cent to 46.72 Worldscale points on Thursday, which works out at US$37,022 in daily earnings for vessels.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Source: NST Online