Oil market contango keeps US tank terminals at capacity

With the oil market in contango, traders have a strong incentive to put crude and refined products into storage, which is good news for tank-farm operators, writes Anne Feltus

IT IS A GREAT time to be in the US oil terminalling business. Tank farms across the country are bulging with crude oil and petroleum products as a result of almost unprecedented demand for storage capacity. By late October, oil inventories had risen to volumes almost 30% higher than the same period in 2008, according to the government's Energy Information Administration (EIA), and distillate stockpiles had reached their highest level in almost 30 years. A combination of forces has been working to the terminal owners' advantage. With several large discoveries in the deep-water Gulf of Mexico (GOM) coming on stream (PE 12/09 p19), the EIA projects total domestic oil production for the year