Traders selling storage assets… Reuters

April 6, 2017 by Jim Colburn Leave a Comment

“Since January, Glencore, Vitol and Gunvor have completed or have been seeking to sell parts of their holdings in storage firms.”. This is from Reuters here…

“When inventories are plentiful, the oil price for future delivery tends to be above the price for prompt delivery, a state known as contango, when it pays to be in the storage business, taking fees and selling stored oil forward at a profit. This has been the situation since mid-2014.”

Traders selling storage assets are raising cash and betting that the OPEC agreement will turn a market in contango to one in backwardation…

Passive long only strategies also gain from backwardation as they roll front month futures length into cheaper deferred contracts…

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