NEW YORK/LONDON - Traders are scrambling to secure oil storage tanks on land and at sea to cope with slumping demand resulting from the coronavirus outbreak and a flood of supply from the Saudi-Russia price war.
Trading house Glencore this week also chartered one of two of the world’s largest oil tankers, capable of carrying 3 million barrels of oil, in order to store crude at sea. Analysts estimate the glut could reach more than 1 billion barrels. Some of the excess will be absorbed by nations snapping up cheap oil for strategic reserves, including India and the United States, but that will only mop up some of the supply.
Storage rates at Cushing doubled over the past month, and were seen as high as about 50 cents per barrel per month by Friday, two traders familiar with the matter said. Storage for about 540,000 barrels at Plains All American’s Cushing tanks for sublease was offered at 50 cents per barrel for a term of one year, one source said.
Nearly 38 million barrels are currently parked there, half the about 76 million barrels in capacity. The rest of U.S. storage is at smaller tank farms or refining facilities. Inventories at Cushing rose more than 640,000 barrels in the week through Friday, traders said, citing data from market intelligence firm Genscape.Once a barometer for the health of U.S. crude supply, Cushing’s market clout waned after Washington lifted a ban on U.S. crude exports in late 2015 amid the shale oil boom.
Yeah let's store all the oil to keep the prices high...
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