If I've got this right (which I probably haven't) but couldn't someone with a few million to spare, just charter a tanker, buy a couple million barrels at current WTI prices,($19.69) sell the July contract (currently $32.80) to lock in a guaranteed profit.

Sit out at sea for a month and deliver as per the July contract when the time comes.

Say, even at 200k /day tanker rates, a tidy profit should possible on 2 million barrels. Tanker rates have been dropping so I'm curious as to why this might be the case, surely anyone with the capital to do this has gone out and grabbed the next available tanker , is this as easy as it seems or am I missing something?

https://oceanmarine.com/detail.cfm?163%2Dft%2E%2DBunker%2DTanker%2D%2Dfile%2D%23%2D15214&product_id=15214&category_current=9&category_current_sub=56

163 Ft Oil product Bunker Tanker For Sale. Single hull. 730 cbm in 8 tanks. 2 Bornemann pumps 2 X 200 cbm hr.Survey and drydocking August 2019.

REGISTRATION YEAR BUILT: 1980 BUILDER: Luhring Brake, Germany FLAG: Togo CLASSIFICATION: IRS CONSTRUCTION: Steel GROSS / NET TONS: 496 / 153 CERTIFIED: CERT. EXPIRES:

OF PASSENGERS: 0

LOADLINE: Yes LAST SURVEY

DIMENSIONS LENGTH: 163.42 FT. / 49.81 MT. BEAM: 30.25 FT. / 9.22 MT. DRAFT: 9.35 FT. / 2.85 MT. REG. LENGTH: 0.0 FT. / 0.0 MT.

CAPACITIES Gal. M Tons Barrels FUEL: 0 0.0 0.0 POTABLE WATER: 0 0.0 0.0 BALLAST: 0 0.0 0.0 DECK CAPACITY:

PERFORMANCE SPEED: 10 KTS CONSUMPTION: GPH: 23.0 Tons Per Day: 1.77

ACCOMMODATIONS BERTHS: STATEROOMS:

LOCATION LOCATION: West Africa

I’m sure no one here is a stranger to the wild ride oil has taken in the last week. To all you USO holders; my deepest sympathies. But opportunity always emerges out of the ruin. In this case, that opportunity is Oil Tankers (VLCC’s, Suezmax, LR2, etc.). I will try and keep this short as this could turn into page after page highlighting all the ways this trade is ripe for 10x (or more) returns.

Where to start, oil tankers have historically been a losing investment. The world has more of them than needed, and supply of oil is pretty balanced with demand, therefore rates for oil tankers stay pretty consistent, and companies show mediocre returns. Let me give you an example of the times we are currently experiencing. In 2019 (which was a very good year for tanker rates), VLCC daily spot rates, weather to transport or hold the crude, were around $25,000 per day. In 2020 thus far, those same day rates have averaged a whopping $103,000 per day. Last week the rates increased to $180,000 per day, and currently we are seeing rates in excess of $250,000 per day with no ceiling in sight.

The reason, as many of you have seen, is that the world has 100’s of millions of barrels of excess oil and no place to put it (India, Cushing OK and China are all nearing 100% capacity). Which in commodity terms can be translated into what's called CONTANGO. Therefore you see occurrences like WTI futures trading at negative $30 per barrel. In a commodity traders eyes, or airline or refinery etc., they are seeing dollar signs. They are taking ownership of this oil and getting paid millions to do so. A typical VLCC holds 2 million barrels. If someone is paying you $30 a barrel to take their oil, as happened earlier this week, guess what, you just got paid 60 million to take 2 million barrels of oil. Then guess what you do? You load that oil on a tanker and wait 6 months for oil to recover and sell it at $20 per barrel, if not more. That means you just made 100 million dollars without putting up a dime for the oil, you just have to pay a tanker to hold it. Now paying $200,000 per day for a tanker doesn’t seem that bad for 180 days, those traders just made serious money off the trade. As you can see, paying rates of up to $350,000 per day is still a win when someone is paying you to take their oil. And guess what happens when all these tankers are being used to hold oil, the existing tankers used to transport crude rocket their rates as well.

How long will the oversupply last? We are nearing capacity all around the world for storage. The world is pumping an extra 30 millions barrels a day it doesn’t need. By mid may the world’s reserves will be maxed out. “But Opec+ is cutting” - Too little too late, they are cutting 10 MM per day starting in May. With new waves of Corona and countries preparing to lock down until late summer, the EIA and other agencies, still expect the glut to build by 10 million barrels per day. That means these tankers will be held up long term storing oil, and when the world finally starts to consume oil, we will have to make up 10 million barrels a day, which could take several years to balance. Keep in mind that the minute oil prices rise, producers will open the wells back up, and the reserves being stored will take longer to exhaust, therefore driving up tanker rates.

Here is the part that's hard to understand; these tanker stocks are still trading below YTD (Currently as of 4/22/2020):

STNG: -35%

EURN: -6%

FRO: -15%

TK: -26%

NAT: +6%

DHT: 1.5%

You might ask yourself, why did these tanker prices increase at the end of 2019? I’ll tell you, a regulation called IMO 2020, which basically means that tankers have to meet certain emission standards or be scrapped. Therefore, months before Corona paralyzed the world, tanker stock were already looking bullish because the fleet size was being reduced due to IMO 2020. Less tankers meet emission standards, less tanker supply, more tanker demand. As you can imagine, Corona and the oil war have added fuel to this fire.

Crunch some numbers and you will see that at the current rates, $200,000 spot price per day, these tanker companies will net more in 3 months than in the last 5 years combined. A typical tanker cost about $10,000 per day to operate, so over the last 5 years with averages rates of $20,000 per day, one boat will net just over 18 million. 90 days at $200,000 per day ($190,000 per day net) shows a net of 17 millions in 3 months. As you can see these tankers are in unparalleled times, capable of making revenues this year alone that match the total market cap of the company.

Sound too good to be true, go re-visit 2003-2008, the last time we had a serious oversupply and Contango, and look at what tanker stocks did during this time. This market is extremely bullish, not for the long term, but is going to be extremely profitable for the next 24 months. Profits would point to these stocks going up 3x, 5x, 10x, or more in value. Companies like EURN, NAT, and STNG have good tanker configurations, meaning the varying types of tankers, VLCC, Suezmac, LR2, ect., and have BEEN BUYING BACK STOCK AS WELL AS INCRESING DIVIDENDS, which is a pretty clear indicator of where the company's management thinks the prices are going.

Here are some good resources: Curzio Research, VLCC Rates, Bulls Coming

tl;dr – The crude tanker industry is about to explode with tankers generating more profits in the next 90 days than they did in the last 5 years combined, and that's only the beginning. The last time Contango and oversupply like this happened was in the mid 2000’s, it generated returns of 5x to 10x up to 50x. At current prices, tankers are vastly undervalued. Earnings reports come out in early May when these shares will sky rocket.

Positions: Basket of stocks (FRO, EURN, STNG, DHT, TK, NAT). Being that earnings for all these companies comes out in early May, expect these stocks to go north at an extreme rate:

EURN $15c 5/15

TNP $5c 5/15

DHT $9c 5/15

NAT $5.50c 5/15

NAT $8c 5/15

STNG $35c 5/15

TK $5c 5/15

This is not investing advice, just my research and positions, make sure and do your own research.