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Oil traders storing crude for profit as contango takes hold

Reuters - UK Focus

LONDON, Aug 20 (Reuters) - Oil traders have begun fixing tankers to take North Sea, West African and Arab crudes to South Africa for storage, hoping for a repeat of the multi-million dollar bonanza they reaped in 2008-2009.

Shipping fixtures show that in late July and August, BP , Mercuria, Total (NYSE: TOT - news) and Chevron all booked suezmaxes to deliver crude to South Africa, with traders saying that a good number of these barrels will go into storage.

Storing crude is now considered profitable for some companies because of a glut of barrels in the Atlantic Basin which has weighed on physical crude prices and Brent crude futures.

As a result, a contango structure has developed which should allow traders to sell stored crude for a profit at a later date. (Reporting by Claire Milhench, editing by David Evans)