Ships, trains, caves: Oil traders chase storage space in world awash with fuel
- Apr 22, 2020
- By Admin
LONDON/NEW YORK (Reuters) - Oil traders are struggling to find enough ships, railcars, caverns and pipelines to store fuel as more conventional storage facilities fill up amid abundant supply and plummeting demand due to the coronavirus crisis.
Dozens of oil tanker vessels have been booked in recent days to store at least 30 million barrels of jet fuel, gasoline and diesel at sea, acting as floating storage, as on-land tanks are full or already booked, according to traders and shipping data.
That adds to about 130 million barrels of crude already in floating storage, traders and shipping sources said. Demand for oil and its products has tumbled as much as 30% as governments around the world have told citizens to stay home to prevent the virus spreading - grounding planes and leaving cars parked up. But the world remains awash with oil supplies.
OPEC, Russia and other major producers have forged a deal to curb production, but it will only reduce supply by about 10% and it does not kick in until May.
It is hard to gauge the world’s total oil storage capacity, but signs that the limit is being reached are increasingly obvious. Rising sea storage is one indicator, as it is more expensive than storing onshore and can be technically complex.