In a clear sign that the glut is abating, oil in floating storage has plummeted in the past few months.
Although the oil stored in ships is a relatively tiny portion of world oil inventory, it is a good early indicator of what is transpiring in the murky physical oil market.
A rise in floating storage is driven by a confluence of cheap shipping and oil prices that are depressed near-term but higher long-term (known as a contango market), thus rewarding arbitragers who hang on to the oil rather than sell it on to end-user refineries.
