Crude price fall points to storage boom

The fall in crude oil prices could bring a business boom for the world’s independent storage operators, and for traders leasing tankers for floating storage

Crude oil prices have moved into contango - prices for future delivery being higher than prompt - and the contango is forecast to widen to the point at which it will exceed storage costs. At the end of December the price of Brent crude to be delivered in February was nearly $4/barrel below the price for delivery in July - the widest contango the crude market has seen since the world recession of 2008-09. The six-month contango - February Brent compared with August Brent - is wider, at $5.50/barrel. In 2008-09 the six-month contango was above $10/barrel, substantially exceeding the cost of storage. Storage in a land terminal in Singapore or Rotterdam costs about $4.50 a cubic metre per month