Brent Oil Futures Moved To Backwardation -Analysts
December 03 2010 - 5:01AM
Dow Jones News
Brent oil futures have moved into backwardation, analysts JBC
said Friday, a move that could trigger a release of floating
inventories to the market.
The Vienna-based energy consultancy said the contracts closest
to delivery were now trading higher than those expiring later, a
phenomenon known to traders as "backwardation".
Traders tend to store oil offshore hoping to capture higher
prices in subsequent months compared with current ones, a trend
called "contango".
The Organization of Petroleum Exporting Countries warned in its
November report that "the shrinking contango will likely trigger a
release of crude oil from floating storage." It said: "the current
level of calendar spreads are unlikely to be profitable for holding
crude oil on vessels considering the cost of storage."
By Benoit Faucon, Dow Jones Newswires; +44 77 601 777 36;
Benoit.Faucon@DowJones.com