Oil punt makes big bucks but coastlines at risk

LONDON (Reuters) – Big international oil companies are making hundreds of millions of dollars storing crude on tankers offshore in a trading play that environmentalists say sidesteps shipping rules and puts coastlines at risk.

The $100 per barrel drop in crude oil prices since July, to around $50, has pushed the market into an unusually sharp contango — a scenario where the cost of oil today is much lower than the price of oil in the future.

Meanwhile, the global economic crisis has led to a more than halving in the cost of chartering oil tankers since last year.

This combination has created an opportunity to buy oil, simultaneously sell it for future delivery to lock in a profit, while storing the oil at sea until the delivery date.

Reuters