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160,000 metric ton capacity
times 2204 pounds per ton
352,640,000 pound capacity
300 pounds of oil per barrel
1,175,467 barrels
at -$37.00
= profitThe problem is that the ship is in Africa. If it were docked in the US and in working condition, it would already be used for storing oil. No, you won't be able to buy this boat and get it here on time to fill it up with negative priced crude oil.
> If it were docked in the US Are low Oil prices only in the US? I would assume it would be a worldwide thing.
Aside from some differences in the specifications of the crude itself, the core difference between these contracts and the key driver for the massive price drop is the delivery location.
Brent contracts are the global benchmark, and delivery can take place in a variety of locations. WTI means West Texas Intermediate, and the delivery location for futures is in Cushing, Oklahoma:
"Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage. Delivery shall be made in accordance with all applicable Federal executive orders and all applicable Federal, State and local laws and regulations..."[1]
Prices therefore reflect the demand and storage capacity/cost there, as well as the cost of sending it somewhere else.
The contract that had the massive drop into negative value was WTI for delivery in May. The owners of those contracts when trading terminates are responsible for taking delivery of that oil in the specified location at the agreed price in May. The negative price reflects the fact that noone wants that oil in that location at that time, even for free. At the low point, buyers were demanding >$35/barrel to take it.
For reference June WTI contracts are currently still $21.43.
[1] https://www.cmegroup.com/trading/energy/crude-oil/light-swee...
So yes...but.. no.
the USA has a very restrictive (and personally I think correctly so) maritime policy: You cannot just sail any boat there, nor can you buy goods, load or trade between ports in the USA without meeting labour and safety issues. So yes...but.. no.
Why wouldn’t someone be able to sail this tanker to a US port, fill it with crude, then offload it at a non-US port? Or even re-flag it as US and trade between ports directly
the USA has a very restrictive (and personally I think correctly so) maritime policy: You cannot just sail any boat there, nor can you buy goods, load or trade between ports in the USA without meeting labour and safety issues. So yes...but.. no.
What do you mean? I assume you’re referring to the Jones Act https://en.m.wikipedia.org/wiki/Merchant_Marine_Act_of_1920 Why wouldn’t someone be able to sail this tanker to a US port, fill it with crude, then offload it at a non-US port? Or even re-flag it as US and trade between ports directly
This bad boy holds about negative $-43,492,267 dollars worth oil. 160,000 metric ton capacity times 2204 pounds per ton 352,640,000 pound capacity 300 pounds of oil per barrel 1,175,467 barrels at -$37.00 = profit
Earlier quoted context omitted.
Which means that somebody is hoping some naive investor will pay them to take a junker off their hands.
17M is . . . not much? What's the scrap value of this thing? It's gotta be mostly steel. 159,000 tons empty. After some bad math, never mind. Let's go with https://www.ajot.com/premium/ajot-shipbreaking-breaking-badl... , which cays south asian yards are offering 495/ton. That's 78.7 M. Which is a lot higher than 17M. Of course there's environmental and labor and by the time you actually break the thing apart and sel…
This bad boy holds about negative $-43,492,267 dollars worth oil. 160,000 metric ton capacity times 2204 pounds per ton 352,640,000 pound capacity 300 pounds of oil per barrel 1,175,467 barrels at -$37.00 = profit
after filling, tow it out to sea and scuttle it
= profitMy point is...you get alot of boat for $17 Million USD.