Premortem a storage trade before it looks obvious
Run a premortem on a commodity storage trade to identify failure modes before committing capital.
A gasoil storage trade shows $4.20/mt positive carry after tank rent. The desk wants to commit 30kt for 60 days. Premortem: assume failure, list plausible causes, convert causes into controls before commitment. The common trap is treating positive spread economics as proof that operational and exit assumptions are stable. State the imagined failure Assume the trade lost $1.5m in 60 days despite positive contango. The failure statement breaks the approval-room pressure to sound supportive. List causes Tank not ready, quality drifts, financing cost jumps, exit window congested, hedge roll slips. The list should include non-price paths, not only spread movement.…
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