Traders Store Crude for Profit as Contango Takes Hold
Oil traders have begun fixing tankers to take North Sea, West African and Arab crudes to South Africa for storage, hoping for a repeat of the multimillion dollar bonanza they reaped in 2008-2009.
Shipping fixtures show that in late July and August, BP (BP) , Mercuria, Total (TOTB.F) and Chevron (CVX) all booked suezmaxes to deliver crude to South Africa, with traders saying that a good number of these barrels will go into storage.
Storing crude is now considered profitable for some companies because of a glut of barrels in the Atlantic Basin which has weighed on physical crude prices and Brent crude futures.
As a result, a contango structure has developed which should allow traders to sell stored crude for a profit at a later date.
(Reporting by Claire Milhench, editing by David Evans)