The contango structure of the oil futures curve is expected to persist for some time, according to Mohammad Alipour-Jeddi, head of the petroleum studies department at the Organization of Petroleum Exporting Countries.
The contango structure of the oil futures curve is expected to persist
for some time, according to Mohammad Alipour-Jeddi, head of the petroleum
studies department at the Organization of Petroleum Exporting Countries.
Contango--a situation where near-term futures prices are cheaper than prices
further into the future--is expected to boost oil inventories in storage,
Alipour-Jeddi said at energy news and pricing agency Platts' crude oil markets
conference.
The persistent contango "has provided a relatively risk-free financial
incentive to build stocks," he said.
OPEC estimates that 80 million barrels of crude oil are being stored on
floating tankers, while 46 million barrels of refined products are held in
floating storage, Alipour-Jeddi added.
He said the oil price curve was unlikely to flip into backwardation, which
reflects a near-term shortage, any time soon. Some analysts have predicted
backwardation--where near-term futures prices are more expensive than deferred
contracts--will return to oil markets later this year.
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