Producers’ mindset needs to change
Storage logistics have never been more challenging, playing to oil traders’ strengths. Pure producers’ structural lack of patience may only assists them
Oil trading companies’ mastery of storage economics in a contango market—where future, so-called ‘curve’, prices are higher than the immediate physical market—bears comparison to investment banks. Just like M&A activity, IPOs and other relatively low-risk banking functions, storage plays are seemingly simple. Work out the cost of storing oil and, when the price difference between prompt and curve exceeds that cost, buy the barrels, pay for the storage, sell the volumes in the futures market and pocket the difference. But, in practice, it is much more complicated. For example, management of physical oil pricing based on Dated Brent using contracts for difference (CFDs), exchange of futur
Also in this section
25 March 2025
Cote d’Ivoire’s ambitions to become a major regional producer have gained renewed momentum, with established players and new entrants striking upstream deals and committing to long-term investment
24 March 2025
Indian E&P company wants to take domestic production to a new horizon, given the amount of unexplored opportunities
21 March 2025
Two recent developments raise the prospect of a revival in northern Iraqi oil and gas fortunes, but familiar obstacles could thwart momentum
20 March 2025
As cash-strapped Western governments commit to substantially raising defence expenditure, a similar dynamic is playing out in Saudi Arabia’s oil and gas sector, as Saudi Aramco maintains it heavy capex push despite reduced revenues
