With the Covid-19 pandemic reducing global oil demand by devastating numbers, oil storage’s are filling quickly in the USA, forcing producers to start shutting output in the country and creating a big tanker congestion on its coasts.
A Rystad Energy analysis reveals that 28 tankers with Saudi oil, including 14 VLCCs and carrying a total of 43 million barrels, will arrive on the US Gulf and West coasts between 24 April and 24 May, 2020.
The Saudi fleet, with oil loaded at Ras Tanura, will join an existing congestion of 76 tankers that are currently waiting to unload in US ports.
Most of these tankers are on the West Coast, where 34 tankers are waiting in line to offload about 25 million barrels of crude. In addition, about 31 tankers, carrying a similar load, are waiting for a slot to unload on the US Gulf Coast.
The tanker congestion has spiked in recent days because refiners are canceling or deferring their purchases, as they adjust utilization rates to match the steep fall in demand for road and jet fuels.
The total volumes booked to arrive from Ras Tanura are four times higher than the previous four-week average of imports from Saudi Arabia.
Given the current storage situation and the level of congestion on US coasts, we find it unlikely that all tankers will be able to unload upon arrival. The congestion at US ports has reached new highs.
If all the Saudi tankers unload, the crude they carry will offset during May almost all of the production reductions from March levels, effectively maintaining the current high storage filling rates.
The limited storage is a growing concern in the oil market and among the key reasons why prices have taken a steep downturn in recent weeks, with US WTI crude even trading negative a few days ago.
US oil production is bracing for a steep decline in May and June as operators shut some of their producing wells due to storage constraints and oil price economics.
Please note that total shut-ins only account for a portion of the US total production decline since March 2020. It does not include production potentially lost from canceling drilling and completion plans.
Oil Price.com / ABC Flash Point News 2020.
Greedy USA took a loan to buy oil reserves at $30-40, when the price was down. Now with the crash they do not have any more storage to use, which puts them in big trouble now?
This happens when money is the only thing that matters for the elite.