Oil Contango Seen by Morgan Stanley Lifting Sea Storage

http://www.bloomberg.com/news/2012-06-25/oil-contango-seen-by-morgan-stanley-lifting-sea-storage.html

By Alaric Nightingale

A widening contango structure in oil prices, in which future crude costs are higher than near-term ones, may spur demand to store crude on tankers, said Fotis Giannakoulis, a Morgan Stanley analyst.

Brent crude futures for October cost about 33 cents a barrel more than first-month contracts, compared with a discount of about $2.44 in mid-May, according to ICE Futures Europe.

Storage at sea may rise if the current contango widens to about $1.30 a barrel, an amount that would cover the costs involved in hiring tankers, Giannakoulis said in a note.

To contact the reporter on this story: Alaric Nightingale in London at anightingal1@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net