Oil trade revives as Brent price climbs
Oil traders have the greatest incentive in four years to store crude at sea and sell it as prices rise, prompting speculation about a revival in the trade once used by companies including BP Plc and Citigroup Inc.
Brent for September traded at $107.60 a barrel at 2.42 p.m. on Wednesday, $1.16 more than the same grade for August, according to the ICE Futures Europe exchange.
That premium hasn’t been bigger since May 2010, the bourse’s data show.
That was also around the time oil companies last used tankers for storage in this way, according to EA Gibson Shipbrokers Ltd, a London-based broker that arranges charters.
The gap between the two months is wide enough for oil traders to profit from keeping oil at sea for delivery later, according to Energy Aspects Ltd, a consultant in London.
Frontline Ltd, an operator of the biggest tankers, said on Monday the premium should be enough to encourage such bookings.
The price structure, known as contango, hasn’t translated into vessels being hired for storage so far and other analysts say it still needs to get bigger for that to happen.
The last time traders stored crude on tankers was June 2010, according to Patrick Tye, an analyst at Gibson.
There have been no reported bookings of tankers for storage so far as a result of the contango, said Odysseus Valatsas, the chartering manager at Dynacom Tankers Management Ltd.
The Glyfada, Greece-based company operates very large crude carriers and other tankers.