Storing a Bet on Higher Oil Prices

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A global scramble for oil-storage facilities is boosting profitability and the share prices of both storage operators and the companies that build new capacity.

Storage capacity, typically located near ports or key distribution areas, allows traders to sit on cargoes until prices improve. That has become more enticing over the past two years as oil has come off record levels of nearly $150 a barrel.

"Access to storage is the entry card to arbitrage," said Ben Holt, vice president of downstream consulting at Wood Mackenzie, a consultancy in London. "There is an increasing trend for trading companies to understand that they need to have access to oil storage in order to do the things that they do," like export crude and other oil products to regions where prices are higher.

source:wsj