The futures were recently down 86 cents (1.26%).
From FT Alphaville:
The issue of floating storage is causing a spirited debate within the energy trading community.
You see, time-spreads are improving — in energy speak that means the curve is flattening, and the contango is abating. On a theoretical level that implies it is no longer economical to store crude oil for the purpose of profiting from the ‘contango trade‘. This is especially so for crude being held in more expensive floating storage.
Simply speaking, the curve implies traders have a strong incentive now to take profits on stored tanker cargoes and release them into the greater energy market.
And yes, the incentive is definitely there. The only problem is, executing that incentive, even in a rising price environment, isn’t as easy as it sounds.
Nevertheless, it appears traders are attempting to take profits. A recent report from Dow Jones suggests the number of crude carriers chartered for oil storage has been dropping. As the report states (our emphasis):LONDON -(Dow Jones)- June 4, 2009-The number of supertankers used to store crude oil worldwide dropped last month after a rally in crude oil prices lured barrels onshore, shipping data suggested Thursday. A total of 34 very large crude carriers were in use for storage purposes at the end of May, down from 53 a month earlier, according to preliminary data from shipbroker Simpson Spence & Young Ltd....MORE