People paying $.0375/bbl/day to store unsold oil on tankers

Storing that oil rather than dumping it into the market at current prices is a costly proposition. If the price doesn't go up $4/bbl in the next 100 days, then you're losing money. If demand stays slack, at what point do they decide to cut and run generating a further collapse in price?

...More than 30 tankers, each with the ability to move 2 million barrels of oil from port to port, now serve as little more than floating storage tanks...

...“It gets expensive to do this,” said Phil Flynn, an analyst at Alaron Trading Corp. “If you’re sitting on a bunch of oil and you’re stuck paying storage and insurance, and you can’t find a buyer, you may have to sell it at a discount just to get rid of it.”

On the other hand, as storage units on land have filled up, the companies that own the tankers have profited. Tanker companies charge an average of $75,000 a day...

posted by Purp at 01:33 AM

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