[3.30] WTI breaks $ 20 per barrel again
The New York Mercantile Exchange West Texas Light Oil May 2020 futures settlement price was US $ 20.09 per barrel, a decrease of US $ 1.42 or 6.6% from the previous trading day, and the trading range was US $ 19.27-20.93.
The London Intercontinental Exchange Brent crude oil futures settlement price in May 2020 was US $ 22.76 per barrel, a decrease of US $ 2.17 or 8.7% over the previous trading day and a trading range of US $ 21.65-24.44.
Nowhere to put excess oil
On Thursday, March 26, Pakistan banned imports of crude oil and fuel because its storage locations were full. Vitol Group and Gunvor Group, two of the world's largest traders, said there was strong interest in storing oil, and some traders had booked supertankers to hoard oil offshore.
Marketwatch, a Dow Jones news agency, quoted a consulting firm IHSMarkit as saying that of the three largest oil producers in the world, Russia has the lowest available oil storage capacity, about 8 days, Saudi Arabia 18 days, and the United States 30 days. These figures are based on the output that can be stored when exports have dried up.
The excess oil supply in the second quarter may reach 12.4 million barrels per day. The question now is where to store the produced oil. It is expected that by June, there will be no space to store oil that no one needs.
Global oil demand is decreasing, and as global oil reserve capacity is slowly approaching saturation, it may force the major oil-producing countries to release production cuts.
The International Energy Agency Administrator Bill Roll said recently that in view of the impact of more than 3 billion people on the blockade, crude oil demand has dropped significantly by 20 million barrels per day compared to last year.
According to IHS Markit, at current supply and demand rates, crude oil inventories will increase by 1.8 billion barrels in the first half of 2020. The remaining storage space is estimated at only 1.6 billion barrels, at which time producers will be forced to reduce production.
Traders, banks and consulting firms are also expected to generate huge surpluses. Oil production will have to be cut or even stopped completely.
