Going by the increasing glut in oil production, traders have started looking to near shore storage options. Traders are already taking advantage of the continuous drop in oil price and storing the surplus in onshore tanks in different geographical locations. Oil experts call this structure as a 'Contango.' The further spreading Contango is enabling traders to access more storage capacity to cash in on glut. Adding to this, Iran is planning to increase oil production once the sanctions are taken off. This will further increase the oversupply of oil.

The oil market is moving in Contango, wherein the spot price is below the cost of buying oil for delivery at a future date. The longest glut in the past three decades is creating more demand for oil storage capacity. Frontline Ltd, a tanker owner, received several inquiries seeking options to a storage facility for crude at sea.
Oil traders prefer to store in tankers at sea where ever the location becomes feasible and profitable, according to Citigroup Inc, Goldman Sachs Group Inc and IHS Maritime & Trade. 

Anchored offshore, oil vessels are lined up from the Gulf of Mexico to Singapore. One can see several onshore storage tanks at a tiny Caribbean island of St Lucia to South Africa to Rotterdam have turned busy with storage activity. This is a common scene today ever since oil price started to dip in the global markets. 

Goldman Sachs has estimated that crude oil supply is much higher than the demand. The glut in crude oil is estimated to be two million barrels a day higher than the demand. This is increasing more pressure on storage capacities across the world. 

Traders are trying to cash in on Cantango opportunities. Glencore Plc hired tanks at the island's only oil terminal to stow crude. Since August 2014, the market is witnessing soaring demand for oil storage. 

Several commodity traders turned busy with hiring supertankers to store huge quantities of oil so that can take profits in future. Global oil majors Shell and energy traders Vitol and Trafigura have already booked tankers for next one year. Many analysts expect that 2009 situation might repeat again. 

Oil is available below $50 a barrel for traders while delivery in future date is higher than the spot price. The Contango opportunity is giving over $6 for traders. It's estimated that Contango should be $6.50 per barrel to cover the storage costs, finance, insurance and margins.

Oil experts forecast that the chances of a further widening of Contango are bright as Organization of Petroleum Exporting Countries (Opec) may continue its production level resulting in more glut. Open producing 30million barrels per day for the past one year.