Storage fundamentals turn

A shift in most oil markets from contango to backwardation is changing the outlook for the global storage business

World oil inventories are falling, and the two-year bonanza that handsomely rewarded oil-storage owners may well have run its course. After building through 2014 and 2016, commercial oil inventories in rich countries ended 2016 unchanged from a year earlier, and have since begun to draw, according to the International Energy Agency (IEA). The agency estimates that the second quarter saw a commercial year-on-year stock withdrawal of 9m barrels, compared with average increases of 45m barrels over the previous five years. This left stocks only 219m barrels over their five-year average, compared with over 330m barrels a year earlier. In its most recent market report, from September, the IEA calc