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Oil traders are hedging their bets

Adam Allington Jan 20, 2015
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Oil traders are hedging their bets

Adam Allington Jan 20, 2015
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Delta Airlines reported a fourth-quarter loss Tuesday because the company’s fuel-hedging contracts overshot the falling price of oil.

Some energy traders and banks seem to think that they might have better luck than Delta. With the forecast for crude starting to trend upward, investors are buying cheap oil and storing it in the hope of turning a profit in the future.

One preferred storage method: Parking the oil on so-called “VLCC’s,” or very large crude carriers, capable of carrying millions of tons of oil in a single delivery. Normally that’s what these tankers would be doing, except almost no one wants to ship oil when the price is so low. 

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