European distillate oversupply, EIA… – Commodity Research Group

February 29, 2016 by Jim Colburn Leave a Comment

The always excellent Today in Energy discusses the oversupply of distillate in Europe, contango and longer voyages for product:

“Trade press reports indicate that several cargoes from the Middle East and India are opting for the longer voyage. A lack of storage space and a large contango have pushed distillate supplies into floating storage and have encouraged import cargoes to take the longer shipping routes. Contango is a situation in the futures market where prices for delivery dates further in the future are higher than those for more proximate delivery. When contango in the futures contracts become sufficiently large, market participants can lock in a profit by purchasing distillate supplies on the spot market, chartering a vessel, and selling a longer-dated futures contract.”

Here is the link: http://www.eia.gov/todayinenergy/detail.cfm?id=25132

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