Brent oil in a contango will encourage traders to take delivery of crude and wait for higher prices, according to U.S. economist Dennis Gartman.
Brent for February delivery is $6.10 a barrel cheaper than the February 2016 contract. February Oman oil traded on the Dubai Mercantile Exchange is $8.30 cheaper than the year later contract after being $6 more expensive about six months ago.
“Not enough people pay attention to the importance of term structure,” Dennis Gartman, author of the Suffolk, Virginia-based Gartman Letter, said yesterday in a phone interview. “The market is saying it will pay traders to go into storage.”
source: BBG
My favorite way to play this is FRO. Other tanker plays include VLCCF, NAT and DHT.
As long as contango exists in a weak crude environment, producers are going to store their product in these tankers, in order to realize higher rates. This bodes well for oil tanker stocks and their day rates.
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I dipped a tip in $FRO. Like that $VLCCF.
Despite the stupid ticker symbol, $VLCCF is 100% dry bulk now. I like DHT, FRO, TNK, TNP and NAT (in that order)
Thanks. I didn’t check on VLCCF yet.
That’s like naming your petshop DOG and only sell cats.
Idiots.
how about TK?
Fly, I understand that point you are making, but I do not think the numbers work out. Do you really think buying a ton of oil, getting it delivered, storing it for a year, then selling it for a 10% profit is really worth anyone’s time/effort?
You would be well served by doing a bit of research. This is not the first time oil has been in contango.
SIA makes a good point
sia- I think if a trading firm has the relationships and logistics in place, this is no big deal. Like me stocking up Starbucks coffee when it is $ 4.00 off at Safeway.
VLCC rates are averaging $34K+ perday, a large CLCC carries 2M bbls times that by the current $57.60 and add the February premium, and you have some good returns.
Lets see… Crash gas prices so the idiot plebs pile into stocks at premium prices. Because crashing a massive industry must be great for the world of finance! And hey, Its the nineties again! Then crater stocks and drive the price of gas back up? Epic fuckery at work.
$FRO…I’m in.
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So “Super Fly” …
For 2015 and beyond … opinions on “Mary Jane” ?
Specially, investment opportunities associated with … cough cough …
“Mary Jane” ???
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Ignore this “movement” if you like but, more and more … POT is becoming “mainstream” !!!
THOUGHTS ???
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“specially” = SPECIFICALLY !!!
Ooops !
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… this “Recreational POT Use Movement” has been similar to a “Trojan Horse” …
… in the way it has “quietly” slipped into and “suddenly” become relevant in … the mainstream conversation !
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… COUGH COUGH !!!
DUDE !!!
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… still illegal in many states it’s very difficult to anticipate where this all goes !
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