Posted by acceso > 2017-07-12 11:26 |

Post removed.Why?

Posted by valuegrowth > 2017-07-12 11:50 | Report Abuse

Good article radzi.

Posted by Rapidinvest > 2017-07-12 13:44 | Report Abuse

If one day at $40k and one month already $1.2mil, how long can they sustain to float the VLCC on sea?

Posted by radzi > 2017-07-12 14:54 | Report Abuse

Many of the VLCC are hedgers, they do arbitrage between spot (present) price and futures price (to be delivered in the future. Example, if spot price is $44 and future price is $55, then the gross margin that they can make is is $11 per barrel.

1 VLCC can store 2,000,000 barrels of oil. If the cost of rental is $2 mill a month, the storage rental cost is $1 /barrel/month.

By this back of envelope calculation , they can sustain to store oil in VLCC for about 1 year before making a loss.

Posted by radzi > 2017-07-13 08:58 | Report Abuse

My calculation made an assumption that the future price is higher than present price. Storing in VLCC double the losses when future price is lower than current price by same above amount and the oil is kept for 11 months before finding the buyer.

Posted by sparrow > 2021-10-05 23:52 | Report Abuse

AAX 40cents in a few of years? what a joke looking back at this old post.