An upsurge in refiner demand for prompt crude has led physical prices up relative to depressed benchmarks. The depth of the contango in forward markets, with prompt supplies valued well below forward, has encouraged the storage of crude. On top of onshore inventories, up to 60mn bl of crude including Russian Urals, North Sea light grades and Algerian Saharan Blend is being stored in very large crude carriers (VLCCs) for future delivery. This has helped curb the availability of near-term crude just as the effects of Opec output cuts begin to be felt.
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