Tradewinds: Crude Storage Trend Slackens

“Buying and storing cheap oil with the expectation of selling it at a future date for a big profit has been all the rage. Back in the spring, oil prices were languishing at around $40 per barrel. This week, crude reached a 2009 high of $80, double its low point, on expectations that the world is pulling itself out of recession. Traders, hedge funds and shipowners all made money but the line of floating-storage vessels, from the US coast to Europe and Africa, is now getting thinner. Poten & Partners summed up the situation: ‘The contango structure in crude-oil markets, which inspired the uptick in storage fixtures, has narrowed since the first quarter of this year and there are indications that the dynamics of floating storage are in flux.’ The volume of oil in floating storage has been on the decline as market players change their strategy, although Poten & Partners says it is unclear whether some are ‘merely finding another home for excess barrels.'”