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

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.

“There’s a window of opportunity right now and it could last some time,” said Sverre Bjorn Svenning, a director at Fearnleys A/S, an Oslo-based shipbroker and consultant. Shipping costs could triple as a result and eventually bring an end to the trade, he said.

The companies exclude Citigroup Inc., Jensen said, declining to identify them. Its Phibro LLC commodities trading unit 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.

‘Significant Returns’

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 pricing structure has been caused by excess near-term oil supply as demand slows, and speculation that output cuts by the Organization of Petroleum Exporting Countries will reduce the glut later this year.

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.

Hoarding at Sea

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

Frontline’s Jensen said Jan. 7 that oil traders wanted as many as 10 very large crude carriers, or VLCCs, to hoard oil for between three and nine months. That would take the amount being kept at sea to the equivalent of almost five days of European Union demand.

Iran, OPEC’s second-largest member after Saudi Arabia, idled as many as 15 of its biggest ships in May to store crude. That contributed to three consecutive months of higher rental rates for ships.

Commodities prices fell the most in five decades last year, with crude dropping more than $100 from the peak of $147.27 a barrel in July, as simultaneous recessions hit the U.S., Europe and Japan. Oil demand in 2008 fell for the first time since 1983, according to the Paris-based International Energy Agency.

To contact the reporter on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net

Last Updated: January 9, 2009 11:08 EST