US oil companies have started sending oil to the strategic oil reserve, reports Bloomberg, citing an official with the Department of Energy.
According to the official, since the beginning of April, some 1.1 million barrels of crude have been sent to the SPR after the federal government finalized negotiations with nine companies for the rental of SPR space so that they can store their crude there.
Talks for the rental of 23 million barrels of space began earlier this month, as prices quickly fell below zero on April 20. above $ 20 a barrel. After yesterday, the US Oil Fund announced that it would sell all of its WTI futures for delivery in June within four days, the WTI fell again, trading at $ 11.11 a barrel at the time of writing. of this report. Brent was trading at $ 19.20 a barrel, down almost 4% while WTI was down almost 13%.
It was a massive sale to avoid physical delivery that resulted in negative WTI prices this month. The sale could repeat itself as storage becomes depleted, both on land and at sea. Signal Group ship demand data show a marked increase in demand from very large crude oil carriers – those who can hold up to 2 million barrels of crude.
But space is running out both in terms of tankers and in terms of shore tanks. In addition, according to a report from Reuters, SPR, the central storage center in Cushing, Oklahoma, should soon reach its limits. The report quoted traders as saying that despite official data setting Cushing’s occupancy rate at 70%, the rest have already been reserved by oil companies for storage space. The hub has a capacity of 76 million barrels. As of April 17, it held 53 million barrels.
By Irina Slav for Oilprice.com
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