Traders are cutting plans to use tankers to store oil at sea as the price incentive recedes, the global head of oil at mining and commodities group Glencore’s said on Tuesday. In January, the price of spot oil was around 50 percent lower than a peak hit in June, enabling traders to potentially make money by storing crude for delivery months down the line, when prices were expected to recover. Tanker industry sources estimated in late January that the volume of oil booked for floating storage had reached up to 50 million barrels. The economics of storage can only work if oil prices for delivery in the future are at a large enough premium to those in the spot market - a market structure known in the industry as contango. A backwardation is when the opposite occurs. Glencore’s Alex Beard said the pricing structure at the moment was feasible for land-based storage options but was not “at current spread levels attractive enough to encourage large amounts of floating storage”. “There were lots of reports of floating storage a few weeks ago. Some of those have been dropped. Some have been used in the market,” Beard said during a presentation to investors after the company’s annual results. “Super contango and super profits in the crude market are just not there at the moment.” Brent crude futures have risen roughly 15 percent from January’s close. And the discount on the Brent crude contract for April delivery versus the contract for December has fallen from more than $8 a barrel in January to around $6 a barrel now. While the discount still makes land storage feasible, it is not attractive enough for those booking tankers. Using ships to store oil is more expensive due to higher costs which include the hire of the vessel as well as insurance and fuel costs, which could work out at anywhere up to $1.5 million per month per supertanker, each capable of holding up to 2 million barrels of oil. “The jury is out on how many ships will actually end up storing. The contango in the oil market has narrowed and the spot market remains strong: two important factors making incremental storage less likely,” crude tanker group Frontline’s Chief Executive Robert Hvide Macleod said last week. “We still think some ships will store, though. Our estimate is 15 to 20 units. And the effect of this will be seen more in Q2 and Q3 rather than in Q1.” Frontline said 40 tankers had been hired for long-term charters this year. Shipping sources said tankers booked for long-term time charters had floating storage options, although it was unclear how many of those options have been exercised by traders. Freight fixtures seen by Reuters showed at least 15 supertankers were listed as being booked with floating storage options, translating into at least 30 million barrels of oil. “It’s hard to completely know how many of these fixtures have been formally concluded as it’s opaque,” a tanker source said. Distillate products, including heating oil, diesel and jet fuel, remain in backwardation on both sides of the Atlantic, making it difficult to store them for profit. A particularly cold winter in the United States has boosted heating oil demand, while the sharp drop in prices since the summer is also increasing consumption.