Morgan Stanley betting oil prices will rise soon

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Morgan Stanley betting oil prices will rise soon

Do you think the oil crisis is over and you can buy that fuel guzzling SUV? Well others are betting its going to rise again soon.

Morgan Stanley hired a supertanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell Plc in trying to profit from higher prices later in the year, two shipbrokers said.

The ship is the Argenta, capable of carrying more than 2 million barrels, Paris-based Barry Rogliano Salles and Athens- based Optima Shipbrokers said in reports today. Morgan Stanley officials in London didn’t immediately reply to three phone messages seeking comment.

Frontline Ltd., the world’s biggest owner of supertankers, said Jan. 14 about 80 million barrels of crude oil are being stored in tankers, the most in 20 years. A purchaser could buy oil now, keep it for months at sea and fetch better prices by selling futures that are higher than the spot price.

The so-called contango pricing structure in oil has been caused by excess supply as demand slows and speculation that output cuts by the Organization of Petroleum Exporting Countries will reduce the glut later this year.

Phibro LLC, Citigroup’s commodities trading unit, has the 1 million-barrel carrier Ice Transporter stationed off north Scotland and also hired the supertanker Ashna to store. Shell, Europe’s largest oil company, booked two supertankers.

“From a tanker owner’s perspective, this is a little gift from heaven,” Finn Engelsen, managing director of Lorentzen & Stemoco AS, an Oslo-based shipbroker and consultant, said by phone from Oslo today.

Morgan Stanley hired its tanker at $68,000 a day, the two brokers said. That works out at $1.02 a barrel a month, based on a 2 million-barrel cargo. Benchmark U.S. oil futures are trading at an average of $3.65 more than the previous month between February and June.
By netchicken: posted on 20-1-2009

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