Traders look to unload crude stored offshore in U.S.

NEW YORK/MEXICO CITY (Reuters) – Trading firms are offering to sell large volumes of foreign crude into the United States in what could be the first steps to unload their large offshore storage positions as the crude futures curve flattens.

Front-month crude oil futures are trading near their lowest discount to second-month futures since late 2008. The spread between July and August WTI futures fell as low as 40 cents a barrel on Wednesday. As recently as mid-April, the spread was wider than $2 a barrel.

The narrowing spread means that trading firms cannot profit from storing oil offshore as they have in recent months, to reap the benefits of discounts for prompt oil prices.

Monthly crude storage costs between 60 cents and $1 a barrel onshore while offshore storage costs more than $1 a barrel, according to industry estimates.

“There were a lot of people ‘hiding’ cargoes in storage, and now they are offering,” one trader said about the higher volumes on offer.

Reuters