Colver Technologies: Oil futures prices trading at premium to spot leads oil traders to store 25 million barrels on supertankers at sea.
According to China’s Colver Technologies, oil traders like Trafigura and Vitol have moved to take advantage of contango in the oil market by hiring out supertankers to store crude oil at sea until such time as the current rout in prices reverses. Contango is the name given to the market condition where the price of a commodity is expected to be higher than the current or spot price.
Gus Stuyvesant, Chief Operating Officer at Colver Technologies explains, “These traders are effectively gambling that the crisis in oil prices won’t last as long as everyone expects. Some of them have fairly deep pockets and will think little of parking a supertanker in the middle of nowhere for 12 months”
The floating storage strategy was last used in 2009 after crude oil plunged from $150 a barrel to a little over $30 as the world headed for post-financial crisis recession. “Back then, as much as 100 million barrels of oil were stored at sea awaiting an upturn in prices which, as we all know, didn’t take as long as many were calling for,” Stuyvesant added.
With oil prices having fallen precipitously over the last 7 months and with no sign of a reduction in supply by OPEC producers, many commentators are speculating that $30-a-barrel oil is not far off.
Colver Technologies says that although the strategy of storing oil at sea is sound, it’s only available to the big players who can afford the cost; typically around $1.5 million per month per tanker. “For sure, we won’t be seeing many mid-sized operators getting involved at those levels,” concluded Stuyvesant.
About Colver Technologies
Colver Technologies’ modular GTL systems revolve around the Fischer-Tropsch reactor, a conversion technology developed in the 1920s by Franz Fischer and Hans Tropsche in Germany in 1925. It facilitates the production of significantly cleaner-burning liquid fuels like diesel and jet fuel from natural gas that contains no sulfur. We are committed to doing our part to drive uptake of GTL fuels as global efforts to reduce emissions increase and have invested heavily to ensure the continuing development of this highly attractive alternative to conventional energy production.
Contact Colver Technologies:
Longzhimeng Asia-Pacific Center
22 Pangjiang Street
Dadong, Shenyang, Liaoning