Crude oil is currently in contango. That’s when the price today for buying a commodity in the near future (like, later today) is cheaper than for the more distant future (like, in three months). That happens occasionally. But Credit Suisse in a note to investors suggests that something even stranger could be around the corner: ‘super contango.’

“When you have a ‘contango’ it means that there’s too much oil around,” says one of the authors of that research note, Credit Suisse global energy economist Jan Stuart. “When you have a ‘super contango,’ it means there’s just, like a freakish amount of oil.”  

Mike Lynch, president of Strategic Energy and Economic Research, explains this “freakish” behavior by comparing oil to tomatoes. If there are too many tomatoes today, producers can freeze them and sell them later.  But this only works if there is room in the freezer. As storage becomes more scarce, it becomes more expensive — sending futures prices (the cost of commodity, plus the cost of storage, plus a small profit) through the roof. 

The crude-oil equivalent would be of crude-oil inventories hitting the “tank tops” — filling the available storage. But Bruce Heine, spokesperson for Magellan Midstream Partners, says none of their crude-oil storage customers have yet asked them to build more tanks at their Cushing, Oklahoma tank farm.  

Credit Suisse’s Jan Stuart believes that a “super-contango” situation in the crude oil market is still a ways off.  To get there, we’ll need another 11 or 12 more weeks  like the last few.