New article by Ådland
The article "Crude oil contango arbitrage and the floating storage decision" has been published in Transportation Research Part E: Logistics and Transportation Review.
Transportation Research Part E: Logistics and Transportation Review is on level 3 in the ABS Academic Journal Guide.
Regli, Frederik, and Roar Os Ådland: Crude oil contango arbitrage and the floating storage decision, Transportation Research Part E: Logistics and Transportation Review, 2018, 122, 100-118, Online 07.12.2018.
Abstract
We investigate charterers’ ability and willingness to exploit floating storage arbitrage opportunities. Using time-series and fixtures data on time-charter rates, we find that arbitrage opportunities were present during the Financial Crisis and the recent Oil Glut.
An investigation of storage profits across storage horizons suggests that positive oil supply shocks favour longer storage horizons than negative oil demand shocks. Evidence from spatial ship-tracking data suggests charterers are reluctant to exploit the arbitrage opportunity when the implied value of transportation from Forward Freight Agreements (FFAs) exceeds the storage profit. Our findings are of interest to maritime economists and oil market participants.