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Global storage capacity can be completed in months in case the petroleum industry increases the abundance

by Bunkerist
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While the coronavirus has eliminated demand, the oil market is heading for a record surplus in April, due to production appetites that threaten the storage capacity of large producers within months and are likely to cause an over supply. While Saudi Arabia and Russia are fighting supply and price for market share, storage levels are rising before a supply wave from other manufacturers enters the market.

US WTI crude oil fell to its lowest level since 2002, dropping to $ 20.37 a barrel on Wednesday and has dropped more than 60 percent since the beginning of the year. US and Brent prices have fallen more than 50% in the last 10 trading days since the 2008 financial and economic crisis.

According to some investors and analysts, a decrease of $ 10 per barrel is possible when it reaches the storage capacity. This last happened in 1998 before both oil companies and oil-producing countries stopped supply.

We may not yet have seen the worst of the market price yet, as the market may face the largest supply surplus in the history of the modern oil market industry in April.

Available U.S. crude storage as of September came to roughly 253 million barrels, out of 653 million barrels of total capacity, not including the nation’s strategic reserves, according to the U.S. Energy Department.

Saudi Arabia is currently planning to increase crude oil production to 12.3 million bpd in April and crude oil exports to more than 10 million bpd from May.

Some major oil consuming countries such as the USA and India are trying to take advantage of low oil prices and aggregate their strategic stocks. The US strategic reserve is capable of supplying 77 million barrels of additional crude oil and will fill in a few weeks.

This is part of the expected global abundance.

According to Kpler data, approximately 3.3 billion barrels of oil are stored on land worldwide and reached 3.4 billion barrels in early 2017.

In addition, 91 million barrels are located in floating warehouses and ships at sea. This is not far from the peaks reached in 2009.

This will increase if producers continue price wars. Since OPEC countries’ financial budgets are under pressure due to low prices, it  will be intensified as they do their best to increase exports.

The International Energy Agency said that on March 9, 2020, oil demand expected to be 99.9 million barrels (bpd) per day, reducing its annual forecast by almost 1 million bpd, indicating a 90,000 bpd contraction for the first time since 2009. IEA said the virus only deleted 2.5 million bpd demand or 2.5% in the first quarter.

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