I think Crude Oil will rise in 2015…and not just by a little bit. I would wager we’ll see crude at least in the low $70’s at some point, while Bank of America is pegging it higher than that. saying we’ll see WTI at $82 before the end of the year.
Here is one of the reasons why I think that will be the case; crude traders are betting on it.
“Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut. Trading firms including Vitol, Trafigura and energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.”
So those companies are going to fill the tankers (VLCC’s) with crude and basically lease some floating storage. The article linked said they were able to secure those tankers at $40,000 per day (the spot pricing is nearer to $60-70,000 per day).
One of these ships holds 3MM/bbls. 365 days in a year at $40,000 per day is $14,600,000. Divide that by 3MM/bbls and you get a cost of $4.87 dollars per barrel to store the crude…that’s actually not a bad bet, if you have the cash. So they certainly think crude oil will go higher than it is right now, thus they take the risk on the cost of storage and hope it plays out that way.