Oil Tankers used to store oil offshore to keep prices high

I don't think its coming back either.. Its time to get off of the oil...

companies do it less dramatically.

The point is that this is why it is difficult to round up a lot of tankers quickly. They're held in reserve.

of this "hoarding". Verifiable ones, of course.

that talk about the practice.

Even if it's not moving, running a tanker costs money. Also, it can't be making it's return trip for more oil if it still hasn't unloaded it's cargo yet.

Tankers are held in reserve for this duty. It explains why it is difficult to just hire a herd of them.

Traders Boost Oil Tanker Storage, Morgan Stanley Says (Update1)
April 26, 2010, 11:24 AM EDT
By Moming Zhou

April 26 (Bloomberg) -- Traders increased the number of vessels used to store crude oil by 75 percent last week as the potential profit from storage rose, Morgan Stanley said.

There were 21 oil tankers storing dirty products last week, 20 of them very-large crude carriers, up from 12 vessels in the previous week, Ole Slorer, a Morgan Stanley analyst, said in a report yesterday. Among the nine vessels are four in Iran.

Part of the drive for floating storage is attributable to oil traders, taking advantage of the reappearance of a contango over the past few weeks,” Slorer said in the report.

Floating storage employs tankers that would otherwise be used to deliver cargoes. Traders store oil hoping to benefit from a so-called contango structure in futures markets, in which prompt prices are lower than contracts for later delivery. Traders can make money when the difference in prices is greater than the cost to charter the ship.

(...)

http://www.businessweek.com/news/2010-05-17/morgan-stanley-says-tanker-rates-may-double-on-floating-storage.html

Morgan Stanley Says Tanker Rates May Double on Floating Storage
May 17, 2010, 9:39 AM EDT

http://www.businessweek.com/news/2010-05-17/morgan-stanley-says-tanker-rates-may-double-on-floating-storage.html

that would be my next question. . .