Plains Looks to Cash in on Rising Demand for Oil Storage

Plains All American Pipeline’s (PAA) (PAA) plans to build a new oil storage terminal at St. James, La., come as the market is rewarding refiners and marketers who build up oil inventories in storage for later use.

The oil market has seen a shift to “a pronounced contango market,” wherein the price of near-term delivery barrels is lower than that of barrels further out, said Greg Armstrong, chairman and chief executive of the oil marketing and shipping company during an investor call Tuesday.

This may become a more permanent feature of the market, as production capacity constraints require consumers to stock up ahead of seasons like winter when demand peaks.
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