Railcars as storage… WSJ

From the WSJ (http://www.wsj.com/articles/the-new-oil-storage-space-railcars-1456655405):

“Analysts estimate there are now as many as 20,000 tank cars—about one-third of the North American fleet for hauling oil—parked out of the way in storage yards or along unused stretches of tracks in rural areas.

Producers and shippers who signed long-term leases for the cars during the boom are stuck paying monthly rates that typically run $1,500 to $1,700 per car. Traders can pay those prices and still profit. Oil bought at the April price and sold via the futures market for delivery a year later could net a trader $8.07 a barrel, not including storage or transportation costs.”

 

The article also mentions an average capacity of a railcar of around 600 barrels.  Lack of storage would cause a spike lower in the nearby price of crude.  More available storage capacity buys time until the market balances.  Swimming pools and bathtubs are next…