Questions For A Trader

gCaptain has recently expanded into the web design and development business. We recently completed an overhauld of Northeast Maritime Institute‘s website and our latest venture is a site redesign for Marine Money International (update coming soon).

While visiting their Stamford Office I was told of a great blog published by traders working for the cargo futures and derivatives firm Imarex. It’s called Ton Mile Trader and while most of the daily posts are of little interest to your average mariner they have two excellent sections called Ask A Trader and Useful Info. Here’s a preview of the questions and answers you can find there:

Where does the term “barrel” of oil come from?

“Barrel” goes back to the discovery of oil in Pennsylvania in 1859.  The only suitable storage containers in extistence at that time were 40 and 42 gallon wooden barrels. The 40 gallon barrel was used to store whiskey, while the 42 gallon model was used to store wine.  Standard Oil preferred the 42 gallon version.  Since they dominated the oil market at that stage, their preference became the standard.

Why are cargos usually quoted in metric-tons, while oil is priced in barrels?

When loading oil into a tanker – both the weight and volume of the oil must be taken into consideration.  While the ships are built to fit even large amounts of the lightest grades of crude oil into the tanks, there is still only so many tons you can load before the ship is in violation of governing rules.  The point being – you can’t load a tanker until it’s almost underwater.  The issue, of course, is that barrels are a volume measure while tons are a weight measure.  In order to convert one into the other, you need to know some specifics – most notably the temperature of the oil and the specific gravity.  Wamer oil will expand, and therefore weigh less per unit volume than will colder oil.  With that said – many cargos are referenced in barrels.  It’s just a matter of “convention”.

Lots more answers can be found HERE and HERE. Go take a look.