As oil dealers scurry to locate storage facilities for their products in the face of a sharp decrease in demand due to the coronavirus epidemic, a record volume of crude oil is being kept on container ships throughout the world. According to numerous maritime sources, Reuters reported over the weekend that traders are feverishly looking into possibilities for storing crude oil both on land and at sea.
According to Reuters, a record-breaking 160 million barrels of oil are currently being stored on ships. Previously, during the 2009 financial crisis, there were approximately 100 million barrels of oil stored at sea, according to the study. According to Reuters, a substantial portion of the oil is being kept on 60 supertankers, also known as very large crude carriers (VLCCs), each of which can hold more than 2 million barrels.
As traders scurry to locate room for oil that isn’t being used, this shows an increase in VLCC usage during the past few weeks. According to Reuters, which quoted sources, 25 to 40 VLCCs were already in operation by the beginning of April, compared to less than 10 VLCCs in February. According to the sources, smaller tankers were also being used to enhance the amount that could be stored. With fewer people using personal vehicles, a major decline in the number of commercial flights, and many manufacturers stopping production, the coronavirus epidemic has significantly reduced the need for oil.
According to the ᴄʟᴏsᴇly-followed Baker Hughes oil rig survey, there were 559 operational oil rigs in North America as of Friday, down from 1078 at this time last year. OPEC and its allies have agreed to cut back on oil production by approximately 10 million barrels per day as nations work to lessen the effects of the coronavirus on their economies. Despite this agreement, oil prices have fallen recently.
The US oil market has entered “contango,” a condition where spot prices are lower than the futures prices, as a result of sluggish demand for oil. A contango suggests that oil demand is now slowing. The number of active oil-producing facilities has also decreased to a four-year low due to the low prices, prompting an analyst to predict that WTI could drop to $10 per barrel. Chief market analyst at AvaTrade Naeem Aslam stated: “Given that the production cut has failed to solve the supply glut, the precipitous decline in the price is due to the lack of sufficient demand and shortage of storage space.”
Thank you for visiting our website! We hope you found soᴍᴇᴛʜing that sparked interest on our website.
Video resource: Top10 Files
