Crude oil storage helped commodity traders and refiners make strong profits last year and in the first quarter of 2016 but now the price structure which made it possible is evaporating. In a typical storage strategy, known as “cash and carry”, traders buy physical crude and put it into storage in a tank farm, or more rarely on a tanker at sea. Traders simultaneously sell crude futures for a nearby contract, hedging their exposure in case prices fall while the oil is stored. As the futures contracts near expiry, traders buy them back and sell more contracts for a date further in the future. The strategy continues until the trader is ready to release the stocks back to the market. But the strategy only works if the futures market trades in contango, with contracts near expiry […]