Frontline PlcLong
Buy Oil Tankers as they benefit from the oil glut
Oil traders buy oil spot and sell it forward to take advantage of unsually large contango on the futures curve. 6 month forward on brent and wti sells at a premium exceeding 10$ a barrel.
Shortage of land storage pushes oil traders to store oil on water using ships. There are only about 800 VLCS (Very Large Container Ships) and the daily rental price has sky-rocketed.. Tankers now rent for 200k to 300k a day vs 25k/day last year.
Tankers like Frontline, Euronav, or DHT will make unprecedented profit for as long as the contango stays... Social distancing will continue well after Q1, keeping oil demand low, and contango high. bloomberg.com/news/articles/2020-04-15/oil-glut-may-overwhelm-storage-despite-opec-cut-iea-says
Al tankers fell sharply on the news Opec would cut production which narrowed the contango slightly, but the latter has since then widened even more than before the news, which should support the tankers again,
8$ is a strong support on Frontlien where high volume exchanged. Buy at current levels around $8.8 with stop below $8, target the highs at $13. risk/reward 4:1
Shortage of land storage pushes oil traders to store oil on water using ships. There are only about 800 VLCS (Very Large Container Ships) and the daily rental price has sky-rocketed.. Tankers now rent for 200k to 300k a day vs 25k/day last year.
Tankers like Frontline, Euronav, or DHT will make unprecedented profit for as long as the contango stays... Social distancing will continue well after Q1, keeping oil demand low, and contango high. bloomberg.com/news/articles/2020-04-15/oil-glut-may-overwhelm-storage-despite-opec-cut-iea-says
Al tankers fell sharply on the news Opec would cut production which narrowed the contango slightly, but the latter has since then widened even more than before the news, which should support the tankers again,
8$ is a strong support on Frontlien where high volume exchanged. Buy at current levels around $8.8 with stop below $8, target the highs at $13. risk/reward 4:1
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