Falconaire Advantage

What the Falconaire network of oil producers are doing is hiring supertankers to store oil at sea for up to a year in order to take advantage of the big disconnect between current oil prices and the futures trading price of crude oil for delivery at the end of 2017. It’s a strategy oil traders used in 2009 to profit on a recovery the last time oil prices crashed.

Here’s how the trade works. The oil trader leases out a supertanker for up to one year at a discount to the current market lease rate and then fills the tanker up with oil at the current price of around $54 per barrel. It then takes advantage of what is known as contango in the market, as the trader can sell that oil on the futures market, where it is fetching $8 more per barrel for delivery at the end of 2017. The oil trading company can then sit back and wait to collect its multimillion-dollar profit.

Here’s how the trade works. The oil trader leases out a supertanker for up to one year at a discount to the current market lease rate and then fills the tanker up with oil at the current price of around $54 per barrel. It then takes advantage of what is known as contango in the market, as the trader can sell that oil on the futures market, where it is fetching $8 more per barrel for delivery at the end of 2017. The oil trading company can then sit back and wait to collect its multimillion-dollar profit.