The oil market's in "contango," which means a lot of parked tankers
Morgan Stanley has just hired a supertanker to store 2 million barrels of oil in the Gulf of Mexico in the expectation that it can sell the cheap oil it buys today for higher prices tomorrow. Citigroup and Shell have done the same thing.
That’s because the oil market is in “contango” — a term that describes a market in which the price set by the futures market for future delivery is higher than the current price. This is bizarre: It means that if you can buy the item today and store it, you can sell it at a guaranteed profit tomorrow. Consequently, 80 million barrels of oil are stored in supertankers at sea — the most at-sea oil in 20 years.
