Official U.S. government data shows that storage at the key crude oil hub in Cushing, Oklahoma, was just 70% full as of mid-April. Traders say that is bunk - because whatever is left is spoken for by firms sending oil to the hub right now.
FILE PHOTO: Pipelines run to Enbridge Inc.'s crude oil storage tanks at their tank farm in Cushing, Oklahoma, March 24, 2016. Picture taken March 24, 2016. REUTERS/Nick Oxford/File Photo
But while the tanks are not full yet, they are fully leased out to producers and traders who will fill them soon, five trade sources said. That means to anybody looking for a last-minute space - there is not any. As coronavirus keeps people at home and obliterates demand, there is no reason for storage levels to fall.
“Firms have oil on pipelines on the way to Cushing and thought they had storage tied up and for some reason they didn’t,” said Phil Verleger, an oil economist and independent consultant. Monday’s historical trading in May crude futures was in part a panicked move ahead of its expiration on Tuesday. But June futures nearly repeated that trick on Tuesday, falling 43% to $11.57 a barrel. For now, the contract is in positive territory, but the price is falling because it is not looking like it will be any easier to find storage for barrels, and in fact, it could be harder.
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