This storage play has netted millions in trading profits for oil firms, as a contango can make it more profitable to store oil instead of refine it, provided the discount between the front-month and second-month crude contracts is greater than the monthly cost of storage.

Over the past several months, a strong contango has contributed to a build up in U.S. onshore inventories to 19-year highs, and has also encouraged dealers to store some 100 million barrels of crude on tankers at sea.

“There’s a lot of stock around, and a lot of OPEC (spare) capacity,” Taylor said.

But Taylor said he did not expect this oil to flood quickly onto markets and drive prices down by $10 or more, with signs of a tentative global economic and oil demand recovery likely to support prices.

“It’s difficult to argue that $60 is not sustainable — gasoline is showing some signs of life,” he said. “If prices come back, so does the attraction of doing more upstream,” he said, adding Vitol wanted to strengthen a strategy of expanding its energy infrastructure, from producing oil to storage projects.

Taylor said that total volumes of oil trade had fallen this year, despite a rise in volumes on exchanges, as the over-the-counter (OTC) trade that makes up most physical oil dealing had dropped. But he did not expect this to last.

“I think there’s going to be a move back to OTC,” he said, pointing to an easing of the fear of defaults that plagued financial markets after Lehman’s collapse last year and a lack of high-risk counter parties in the industry.

Asia’s OTC fuel derivatives market, pounded last year by the credit crunch and high, volatile oil prices, has seen some confidence return.

Asked if a pullout of big banks from the energy sector amid the financial crisis was offering opportunities for trading firms like Vitol to fill the void, he said: “I’m not sure there is a big void… I don’t see a huge opportunity there.”