Oil Majors Use Billions to Profit From Contango Before It Fades
- Shell, Total spent billions storing oil for later delivery
- Opportunity is set to vanish next year, DNB Bank says
Shell Beats Profit Estimates on Boost From Refining
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The largest energy companies in Europe bolstered first-quarter earnings by pumping several billion dollars’ worth of oil into storage tanks and holding it there, although the trading opportunity is starting to fade.
Royal Dutch Shell Plc said on Wednesday it employed about $1 billion of capital between January and March buying oil for storage that would be sold later at a higher price. French oil major Total SA last week said it used $750 million on the strategy -- a so-called contango trade. While BP Plc hasn’t disclosed how much it spent, the company said its working capital increased by $800 million during the quarter.