Insanity keeps marching - Investment banks with hugh bailout packages should not be allowed to do this kind of speculation with taxpayers money

Paulson is a pure lobyist and not a Secretary as h,s TARP program should be used to stabilize the mortgage market for main street and not finance oil arbitrage business. This is another insane way to screw taypayers - I do not see a big difference beween Madoff and Paulson as he did not use the funds for the purposes he claimed at all. As a former CEO of Goldman his intention was always to support wall street very obviously.

Investment Banks Seek Supertankers for Contango, Frontline Says

By Alaric Nightingale

Jan. 9 (Bloomberg) -- Investment banks want to hire supertankers to store crude oil at sea, seeking to profit as futures contracts get more expensive later in the year, according to Frontline Ltd., the largest owner of the ships.

A “few” are asking about hiring Frontline’s vessels, Jens Martin Jensen, the Singapore-based interim chief executive officer of its management unit, said by phone today.

Those companies exclude Citigroup Inc., he said, declining to identify them. Its Phibro LLC commodities trading arm has the 1 million-barrel Ice Transporter stationed off northern Scotland, according to people familiar with the matter. Hedge funds aren’t trying to conclude such deals, Jensen said.

The banks, which tend not to hire ocean-going tankers, are seeking to profit from a market situation called contango where futures prices are higher than the cost of immediate supplies. A purchaser could buy oil now, keep it for months at sea and fetch better prices by selling oil futures that are higher than the spot price.

Morgan Stanley owns half of Heidmar Inc., a company that operates oil tankers on behalf of groups of owners. Goldman Sachs Group Inc. trades commodities through J. Aron & Co. Barclays Capital noted the potential for profit as early as November, saying in a report that traders could make “significant returns” by storing oil and copper.

Heidmar hasn’t had demand for its tankers to store oil, probably because the vessels aren’t the largest supertankers that presently make the trade attractive, Tim Brennan, the company’s chief executive, based in Norwalk, Connecticut, said by phone yesterday.

The cost of storing on supertankers works out at about 80 to 90 cents a barrel each month, Denis Petropoulos, head of tankers at Braemar Shipping Services Plc, the world’s second-largest publicly traded shipbroker, said Jan. 7.

West Texas Intermediate crude oil futures for March delivery are trading at $45.98 a barrel, about $4.78 more than the February contract.