Traders and oil major such as ConocoPhillips are hiring tankers and taking advantage of a deepening contango.
ConocoPhillips hired the tanker TI Europe for storage in the Gulf of Mexico, as figures reveal a widening gap between current prices of crude and contracts for delivery six months from now.
The price advantage, or contango, to buy and hold crude more than doubled to $5.76 (4.54) a barrel last month from $2.60 at the end of July, as contracts for October delivery fell 9.4% and March dropped 5.3%.
Crude, petrol and heating oil inventories reached a 20- year-high last month as the U.S. Commerce Department said the economy probably expanded at a 1.6% annual pace in the second quarter from an initially reported 2.4%.
Frontline, the worlds largest tanker operator, said on 27 August that demand for ships used for storage will rise in Q4.
The Energy Department said in May 2009 that as much as 130 million barrels were floating on ships around the world. The strategy helped boost BPs profit by $500 million in the first quarter of 2009.
The TI Europe, the tanker hired by ConocoPhillips for storage in the Gulf, has a capacity of 3 million barrels, and ConocoPhillips is paying $41,000 a day.
The trade diminished as spreads narrowed. The amount held on Very Large Crude Carriers hired for long-term storage has fallen 49% this year to 39 million barrels as of 27 August, according ICAP Shipping International.