Short Comments On Crude Oil Futures And Baltic Dry Index

On FinancialSense. Wholesale Prices Post Largest 12-Month Decline Since 1950

• Crude Oil Daily Futures
  
  Floating Storage.
  Because of the contango shown on the left, it may be cheaper to buy crude now, assuming one has storage, and storage costs are low enough.
  
  Of course, whether it is wise to stock up now depends entirely on where prices head from here.
  
  Regarding contango, a friend just pinged me with this comment:
  
  "Nordic American estimates that up to 80 VLCC's (Very Large Crude Carrier) are currently used as 'floating storage.' I have heard from a shipping company in Hong Kong that they think it is even more, as China has apparently hired many of the old single hull ships to use as floating storage until it can build enough storage facilities on land. There's a lot of oil 'floating about', literally."
  
  All things considered, oil prices are due for a pullback and gasoline prices at the pump are likely to follow. Moreover, with the possible exception of food, consumer prices in general will remain under pressure, if not indeed negative on a year over year comparison basis for quite some time as well as falling producer prices pass up the chain.

On the Baltic Dry Index.

Well, you do note that it had been soaring lately. Yes? Have you been watching?

• MUMBAI: Despite India’s key benchmarks ended in red sighting the uncertainty over the election outcome, shipping stocks soared on Thursday as Baltic dry index, which is a leading indicator of global demand for raw materials hit new high of 2009.
  
  ABG Shipyard jumped 6.84 per cent, Bharati Shipyard climbed 10.16 per cent, Essar Shipping surged 18.72 per cent, Mercator Lines rose 6.87 per cent and, Seamec advanced 4.99 per cent, Shreyas Shipping gained 12 per cent and Varun Shipping gained 3.45 per cent.
  
  The Baltic Dry Index (BDI) closed above 2300 for the first time since October 10, and reached a 7-month high on Wednesday of 2332. Over the last ten days, the BDI has increased by 560 points (32%), and over the last 25 days the index has increased by 869 points (59%).
  
  February to April saw the highest amount of iron imported by China, including more than 45 million tons in April alone. That has chiefly propelled the rise in the Baltic Dry Index, with heavy activity reported on the Australia to China route.
  
  Chinese buying of iron ore was predominantly stimulated by lowest prices in four years. The latest CIF (cost, insurance and freight) price. (source: here )