Last Sum­mer, we were reminded over and over how we were run­ning out of oil. Now we find our­selves in the awk­ward sit­u­a­tion of run­ning out of places to store the stuff. Its pretty clear that the price of oil is no longer sub­ject to the deci­sions of the oil pro­duc­ing coun­tries to cut pro­duc­tion. They are now in the unusual posi­tion of being pow­er­less, push­ing on strings like cen­tral bankers.

Over the last sev­eral years, demand for paper oil (naked oil futures) was far greater than for the phys­i­cal stuff, and now that the paper world has been unrav­elled, and the paper money (lever­age) that sup­ported it is being retired, the one prob­lem at least for now has been that there have been a great deal more sell­ers of the paper oil than buyers.

At the end of 2008, the IEA reported that cur­rent inven­to­ries of crude oil, gaso­line and dis­til­late fuels were well above their long term aver­ages. Run­ning out of stor­age for oil is great for the tank and tanker busi­ness, but a bear­ish devel­op­ment for oil, despite the recent run-up.

Ship­ping prices col­lapsed as trade slowed last year, but they are now ris­ing sharply as traders at the likes of Cit­i­group and BP fill tankers and moor them off Scot­land. Thurs­day, daily char­ter rates for tankers ship­ping crude from the Mid­dle East to the U.S. jumped 45%, accord­ing to London's Baltic Exchange.

If you really don't want to get your hands dirty, you could just buy tanker futures. Despite the lat­est jump, they are roughly a third of where they were six months ago and will prob­a­bly con­tinue ris­ing as sur­plus oil looks for a home.

Did we really go that rapidly from run­ning out of oil to run­ning out of places to stock­pile it?

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