Morgan Stanley Hires Supertanker to Store Oil in Gulf

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Jan. 19 (Bloomberg) -- Morgan Stanley hired a supertanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and N' ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">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.

Banks and commodity traders are seeking new ways to make money after theStandard & Poor’s 500 Index fell by the most since 1937 last year and crude oil prices dropped more than $100 a barrel from their peak. Companies including Koch Industries Inc. and N' ))" style="font-weight: bold; text-decoration: none; color: rgb(0, 107, 153); ">BP Plc are hoarding enough crude at sea to supply the world for almost a day.

“It’s a window of opportunity that won’t last long,” Gareth Lewis-Davies, a London-based energy analyst at Dresdner Kleinwort Group, said by phone. There may only be four or five banks with the expertise to make the trade, he said.

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.

Crude Grades

The easiest types of oil to buy for the trade are likely to be either West Texas Intermediate or the North Sea grades Brent, Forties, Oseberg or Ekofisk. That’s because they are the ones used to settle the most-traded futures contracts.

Other oils, such as those from the Middle East and Africa, are usually bought and sold at prices related to the main European and U.S. grades. Because those prices fluctuate, it means traders assume an extra risk by hoarding them.

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.

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