Monday, June 25, 2012

Oil Contango Seen by Morgan Stanley Lifting Sea Storage

By Alaric Nightingale
A widening contango structure in oil prices, in which future crude costs are higher than near-term ones, may spur demand to store crude on tankers, said Fotis Giannakoulis, a Morgan Stanley analyst.

Brent crude futures for October cost about 33 cents a barrel more than first-month contracts, compared with a discount of about $2.44 in mid-May, according to ICE Futures Europe.

Storage at sea may rise if the current contango widens to about $1.30 a barrel, an amount that would cover the costs involved in hiring tankers, Giannakoulis said in a note.

To contact the reporter on this story: Alaric Nightingale in London at
To contact the editor responsible for this story: Stuart Wallace at

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