Oversupply: Oil pumping jacks, also known as ‘nodding donkeys, ’ operate in an oilfield near Almetyevsk, Tatarstan, Russia. The so-called prompt contango, measured by the difference between Brent crude for delivery in one and two months, widened yesterday to an almost five-year peak near US$1.50 a barrel - an indication of mounting oversupply. — Bloomberg
LONDON: Saudi Arabia and Russia’s price war is handing over a multi-billion dollar profit opportunity to the world’s largest oil traders.
With both Riyadh and Moscow outdoing each other by pumping more oil into an already flooded market, crude prices have flipped. A new price structure, called a contango, allows the traders to make easy money by buying crude cheap, storing it, and selling it forward.
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