Oil Shift Toward Contango May Boost Tankers, Morgan Stanley Says

A shift in pricing of oil futures may encourage traders to store cargoes at sea, boosting demand for tankers, Morgan Stanley analysts said.

Brent crude oil for March is trading at 28 cents more than April contracts on the London-based ICE Futures Europe exchange. First month contracts were $1.49 more than second-month ones on Dec. 15. When immediate prices fall below future ones, markets are said to be in contango, a situation that can encourage cargo storage.

In late 2009, oil companies stored more than 110 million barrels of crude at sea, Morgan Stanley analysts led by Ole Slorer in New York said in an e-mailed note today. That’s the equivalent of 55 supertankers, known in the industry as very large crude carriers, or VLCCs.

“As the oil market is heading toward contango, the supply/demand balance might become irrelevant once again for a while,” Morgan Stanley said.

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