Majors' contango play set to fade
Oil companies that profited from storing oil amid falling prices are unlikely to to see similar returns as the longer-term economic picture begins to brighten. Pauline McCallion reports
Oil companies were able to offer a bright spot among depressed first quarter results recently thanks to trading activities centred around the contango in the West Texas Intermediate and Brent Crude oil markets. Contango occurs when the price of futures contracts increase along the forward curve. In mid-April, the front-month WTI price was trading more than $8.35 below contracts six months out along the curve.
This encourages storage, since oil traders will profit from buying now and selling for
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