Crude Storage Tanks Nearing Their Brim Spur `Super Contango'
- Gap between monthly contracts reached $1.46 a barrel Tuesday
- U.S. crude supply at highest for time of year since 1930: EIA
Oil storage tanks sit at the Esso oil refinery, operated by Exxon Mobil Corp. in Fawley, U.K., on Friday, Oct. 2, 2015. A 50 percent drop in crude prices in the past year has hit earnings for oil and gas producers, forcing them to slash capital spending and scale back unprofitable operations.
Photographer: Simon Dawson/BloombergThis article is for subscribers only.
Surging U.S. crude stockpiles that have filled storage tanks near capacity are widening the discount on immediate oil deliveries.
Spreads between monthly oil-futures contracts are often seen as a reliable gauge of market conditions, and a discount on the earliest months -- known as contango -- typically signals that supplies exceed demand. Contango isn’t "going away anytime soon," Societe Generale SA analysts said in a research note on Tuesday.