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Surge in floating storage signals short-term oil optimism - RBC

Published 06/23/2017, 04:34 AM
© Reuters.  Surge in floating storage signals short-term oil optimism - RBC
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  • A recent jump in floating crude storage despite being an uneconomic venture suggests traders expect oil prices to rally, RBC Capital Markets says.
  • “Physical energy traders have been willing to pay the ~10c/barrel differential between the front contango and the cost of floating storage for the regional optionality in hopes that the cost of carry becomes negligible if spot prices rally,” firm notes.
  • Front-month Brent contango near 25c/bbl while the cost of storing oil at sea for a month is ~35c/bbl, suggesting traders are expecting to unload the barrels at sea at a profit in coming weeks.
  • ETFs: USO, OIL, UWT, UCO, DWT, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM, OILK, WTIU, OILX, WTID, USOI
  • Now read: High Yield Bonds Under Pressure


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