[DantesPeak]

It would take me too long to debunk all the errors and false assumptions in the above linked post.

So briefly - I've already previously posted the following:

1. Iran said it was using up the low quality oil in floating storage, which would be gone about July 1 or so.
2. Iran announced today it was cutting oil exports 200,000 bpd due to a severe energy crisis (not enough water to generate electricity at hydro-plants).

Also tankers usually make more money by shipping oil faster, and in the US, refineries operate something close to just-in-time, so shipping delays can cause real problems.

There's actually a web site where your can track world wide shipping. It's quite amazing. Maybe someone could figure out if what's said above even has one speck of truth to it.

I'd also like to know if the person writing this article predicted in 2007 prices this high this year. I did.

[JohnDenver]

$this->bbcode_second_pass_quote('DantesPeak', 'A')lso tankers usually make more money by shipping oil faster

[DantesPeak]

$this->bbcode_second_pass_quote('JohnDenver', '')$this->bbcode_second_pass_quote('DantesPeak', 'A')lso tankers usually make more money by shipping oil faster

[dunewalker]

$this->bbcode_second_pass_quote('DantesPeak', '')$this->bbcode_second_pass_quote('JohnDenver', '')$this->bbcode_second_pass_quote('DantesPeak', 'A')lso tankers usually make more money by shipping oil faster

[DantesPeak]

$this->bbcode_second_pass_quote('dunewalker', '')$this->bbcode_second_pass_quote('DantesPeak', '')$this->bbcode_second_pass_quote('JohnDenver', '')$this->bbcode_second_pass_quote('DantesPeak', 'A')lso tankers usually make more money by shipping oil faster

[frankthetank]

dunewalker has to be correct here. There is no way the price of oil on a tanker is changing hourly...

You'd see the captain backing off on the throttle as they reload 321energy every 30 minutes

[seahorse]

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?

[dunewalker]

JD wrote:

"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."


It's just common sense that prices are set before shipping, just as for most everything else we buy. If they're going to delay sale & wait for higher prices, they do it by warehousing the oil, or leaving it in the ground.

[seldom_seen]

Maybe Iran made a bad futures bet and they had to take delivery on a bunch of their own oii? Ouch.

[JohnDenver]

$this->bbcode_second_pass_quote('seahorse', 'P')lease explain the apparent contradiction to me?

[JohnDenver]

Another analyst talking about tankers offshore:

$this->bbcode_second_pass_quote('', 'F')eer 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."

[TonyPrep]

$this->bbcode_second_pass_quote('JohnDenver', 'T')hey 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.

[seahorse2]

On MSNBC, an "oil analyst" said it doesn't make economic sense for Iran to store oil in tankers (to raise prices), bc its far cheaper simply to not produce it. So, I doubt Iran would be storing on on tankers and paying tankers to sit there just to jack up the price of oil when they could simply stop or reduce their production.


DP posted this article on another thread speculating as to why Iran may be storing oil on tankers (basically, as he already said, to use for power generation bc a drought is affecting power generation).

News

[threadbear]

$this->bbcode_second_pass_quote('seahorse', 'J')D,

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?

[threadbear]

$this->bbcode_second_pass_quote('TonyPrep', '')$this->bbcode_second_pass_quote('JohnDenver', 'T')hey 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.

[jdmartin]

$this->bbcode_second_pass_quote('JohnDenver', '')$this->bbcode_second_pass_quote('seahorse', 'P')lease explain the apparent contradiction to me?

[Madpaddy]

They are in the tater.

[NTBKtrader]

Aug. 6 (Bloomberg) -- Oil-tanker rental rates may rise after last week's 46 percent slump spurred owners to slow their vessels, reducing supply and increasing costs for oil producers and refineries who hire the vessels.

Owners are telling captains to sail more slowly, according to three shipbrokers. The last time that happened, in the final months of 2007, rental rates posted the fastest two-month gain in at least 16 years, increasing costs for oil producers seeking to ship supplies to refineries.

The CHART OF THE DAY shows how slower sailing speeds at the end of last year helped bolster hiring rates. The average speed of very large crude carriers, or VLCCs, including those at anchor, has declined 3.8 percent to 10.21 knots since July 12.

``Panic will be moved from owners to the oil companies,'' Nikos Varvaropoulos, an official at Optima Shipbrokers, Greece's largest, said yesterday. The advance in the next several months may be ``even better'' than at the end of last year, he said.

Vessels on average slowed 20 percent to 12 knots in the final months of last year, according to a May 2 regulatory filing from Frontline Ltd., the world's largest owner of the vessels.

The hiring rates are in Worldscale points, which are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
link

[Sixstrings]

$this->bbcode_second_pass_quote('', 'F')rom 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.

[jamest]

Once again, if oil importing nations were smart, they'd be buying up oil and putting it in salt domes.