Oils Prices Fall on Storage Concerns
April 20th, 2020
The Baker Hughes Rig Count released Friday called oil rigs down 66 to a total of 438 rigs. This was the fastest decline since March of 2015. Last year at this time there were 828 oil rigs in operation.
Crude oil is getting sold off hard today as global storage fills up and prices continue to fall. It appears the lows are not in yet for today but so far, the low has been $11.04 dollar per barrel for WTI crude oil down over $6 dollars per barrel. The front month WTI crude oil contract (May) is set to expire tomorrow and that is adding to the sell off. With front month crude oil at $11.04 it is now at a level not seen since back in December of 1998.
The CFTC reported on Friday that speculative net long WTI futures positions rose by more than 25,700 contracts. In the previous report net longs in WTI rose by more than 49,7000 contract, as many are trying to but a bottom.
Bearish for prices this past week were an OPEC monthly report on Thursday, a bearish International Energy Agency monthly reported released on Wednesday, and a very bearish EIA weekly petroleum inventory report also released on Wednesday.
Reports indicate that traders are storing an estimated 160 million barrels of oil on ships, double the level from two weeks ago, as they seek to tackle an oversupplied market due to a fall in global demand. Oil held in floating storage on tankers had reached at least 160 million barrels, including 60 super tanker. This is compared with 25 to 40 VLCCs in February. There are over 770 VLCCs in the world and analysts have estimated as many as 100 to 200 supertankers could be deployed for floating storage in coming months.