DantesPeak wrote:Also tankers usually make more money by shipping oil faster
JohnDenver wrote:DantesPeak wrote:Also tankers usually make more money by shipping oil faster
The operative word being "usually". The rate for a VLCC carrying 2 million barrels is currently about $175,000/day. If oil goes up $1 in a day, that's a profit of $1.825 million per day for "engine trouble", "fog" etc.
It's just common sense that people are going to hold onto oil and delay sale in a climate of rapidly rising prices.
DantesPeak wrote:JohnDenver wrote:DantesPeak wrote:Also tankers usually make more money by shipping oil faster
The operative word being "usually". The rate for a VLCC carrying 2 million barrels is currently about $175,000/day. If oil goes up $1 in a day, that's a profit of $1.825 million per day for "engine trouble", "fog" etc.
It's just common sense that people are going to hold onto oil and delay sale in a climate of rapidly rising prices.
I'm not saying that's impossible, just that there's no proof.
dunewalker wrote:DantesPeak wrote:JohnDenver wrote:DantesPeak wrote:Also tankers usually make more money by shipping oil faster
The operative word being "usually". The rate for a VLCC carrying 2 million barrels is currently about $175,000/day. If oil goes up $1 in a day, that's a profit of $1.825 million per day for "engine trouble", "fog" etc.
It's just common sense that people are going to hold onto oil and delay sale in a climate of rapidly rising prices.
I'm not saying that's impossible, just that there's no proof.
Isn't the price of a load of oil set when it's loaded, not when it's delivered? I can't imagine an oil tanker floating around the world, looking for the highest price to unload at. This would also explain the occasional diversion of a tanker from its original destination due to a higher bid.
seahorse wrote:Please explain the apparent contradiction to me?
Feer said analysts concluded there had been a problem unloading stocks of crude because of fog at US terminals, and in fact there is a lot of oil "sitting in tankers offshore."
I don't think that's true, but I can see that it would suit your position to think so.JohnDenver wrote:They militantly believe that supply and demand is the only relevant factor, and dismiss any information which conflicts with that, without even really looking at it. So it's a blind spot, and somebody needs to keep an eye on it.
seahorse wrote:JD,
Let's assume that's all true, that speculators are having tankers idle in the water. What's wrong with that? Under your theory, high prices will cause a move to alternatives. It seems a bit contradictory lately for you start taking the position that oil prices should not be high, simply bc high oil prices, according to you, will cause the market to shift to alternatives. Please explain the apparent contradiction to me?
TonyPrep wrote:I don't think that's true, but I can see that it would suit your position to think so.JohnDenver wrote:They militantly believe that supply and demand is the only relevant factor, and dismiss any information which conflicts with that, without even really looking at it. So it's a blind spot, and somebody needs to keep an eye on it.
As for delaying tankers deliberately, the more they are delayed, the less that can be shipped and more money is lost. Suppose a producer ships a load of oil to be traded at the target post (others have said this isn't the way it works, but suppose it is) but delays unloading to get a higher price. Let's say the shipment is worth X dollars. If the length of time from loading to unloading, then return, is Y days, then that is X/Y dollars per day. If the unloading is delayed by 5 days, that is X/(Y+5) dollars per day. So money can be lost. Only if the price rises enough to more than cover for this lost revenue would it be worth it. But it would be a gamble. We've seen prices drop by almost $10 in a couple of days, so a delay, in that time, would be very costly indeed. Eventually, enough producers would realise that gambling is a mug's game and revert to normal delivery strategies. Even if they didn't, the delay would stop as soon as there are not enough tankers to actually load the oil in the first place; from then on, there would, essentially, be no noticeable deliberate delays.
JohnDenver wrote:seahorse wrote:Please explain the apparent contradiction to me?
seahorse, I don't believe there is any contradiction between:
A) High prices will drive the shift to alternatives.
B) A significant part of the current price is due to financial factors (weak dollar, securitization of commodities, momentum investing, index speculators, hoarding etc.)
To put it simply: I believe both of those statements are true.
More generally, I'm interested in exploring financial factors because it is politically incorrect for orthodox peak oilers to do so. They militantly believe that supply and demand is the only relevant factor, and dismiss any information which conflicts with that, without even really looking at it. So it's a blind spot, and somebody needs to keep an eye on it.
From the Indian Ocean to the South Atlantic to the Gulf of Mexico, giant supertankers brimming with oil are resting at anchor or slowly tracing racetrack patterns through the sea, heading nowhere.
The ships are marking time, serving as floating oil-storage tanks. The companies and countries leasing them for that purpose have made a simple calculation: the price of oil has fallen so far that it is due for a rise.
Some producing countries are trying to force that rise by using the tankers to withhold oil from the market, while traders are trying to profit by buying cheap oil now to store and sell at a higher price later. Oil storage has become so popular that onshore tank capacity is becoming scarce.
Only six months ago, companies up and down the energy pipeline were rushing oil to market, struggling to keep up with galloping demand and soaring prices. Now, with the global economy slumping and people driving less, demand for oil has plunged — and the same companies are acting in ways that would have been unimaginable until recently.
Oil producers are shutting down rigs, refiners are producing less gasoline, and investment planning throughout the industry is in turmoil.
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