Oil prices could soon turn negative as the world runs out of space to store it

The world’s thirst for oil has evaporated.

Highways are empty. Planes are grounded. Factories are dark. The unprecedented collapse in oil demand has sent crude crashing to 18-year lows.

Supply, on the other hand, remains largely resilient amid a price war between Saudi Arabia and Russia. US producers don’t want to be the first to blink by turning off production.

That could mean a supply glut so epic that the world will soon run out of room to store all the unneeded barrels of oil.
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Elmo

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17 Responses to Oil prices could soon turn negative as the world runs out of space to store it

  1. SgtBob says:

    When oil prices were high, economists warned of a coming catastrophic collapse of world markets. Now that prices have fallen way low, economists predict the same collapse. Predictions are based on whoever hires the economists.

    • Elmo says:

      Three economists go deer hunting. When a beautiful buck appears the first economist raises his rifle and fires. The shot is three feet low. Then, after the second economist’s shot sails high by three feet, the third economist jumps up and hollers “WE GOT HIM!”.

  2. Hadenoughalready says:

    It’s a good time to watch the prices and, when that “money” comes in, buy what you can.
    Winter’s coming again so you may as well stock up. And if you can, get extra fuel tanks and tie them in.
    “Better to have and not need than need and not have”, right?
    This crap isn’t over by any means. The virus might fade away but the economy is another issue.
    Learn from the mistakes we realized and fix them. You may not have a second chance; this WAS your second chance.

  3. Daryl says:

    What surprises me is there isn’t a gas shortage, but is of toilet paper. When things started I made sure the car and truck and couple cans were kept full and expected a line but no such thing.

    • WiscoDave says:

      And I couldn’t get my bulk tank filled fast enough.

      • Wirecutter says:

        I filled up yesterday at $1,83 and when I checked gas prices 7-8 hours later it had dropped another 6 cents.

        • Heathen says:

          Seeing as I’ve another Doctor’s appointment 40 miles away on Friday, I topped off today and with the “fuel points” on my card the price was 99.5 cents a gallon. Damn shame that 1/2 that will be used there and back.

  4. The Jannie says:

    And what’s in it for our all-powerful “friends” in the Middle East? Sand!

    • the other Rick says:

      The U.S. has said that if foreign producers drop below a benchmark (say $50/bbl) that the fedgov will fine the producer on a sliding scale. The fine will go to the Treasury Dept.

      EX: foreign producer exports to the U.S. at $30/bbl. Using the above benchmark of $50/bbl, the fine would be $20/bbl.

      The problem with that is the $30 bbl still gets into the U.S. but only the Treasury profits from it. Private business would still have to compete against that $30 bbl. It seems our own fedgov is subsidizing foreign producers at the cost to domestic private business.

  5. Bob M says:

    You’re missing the real point here. When the refineries runout of storage space, they’ll stop refining. That includes diesel. And when diesel runs out, the trucks stop. And when the trucks stop, no more deliveries. And when there are no more deliveries, no more food. And then riots. REAL riots. People starving riots. Get ready.

  6. realspark21 says:

    I personally am sponsoring neighborhood burnouts during the ‘quarantine’. One of my neighbors hates it. My local deputy buddies have been driving by and having a bit of fun themselves. And we are keeping over a three car length distance for social distancing. The price of fuel is awesome! And we may see the price of tires go doing too…

  7. Nemo says:

    Trump announced a deal, with Russia and Saudi this morning, to cut crude production by 10M/BBL/Day. Oil price jumped ~$3.00 on the news and settled down @ ~+$2.50. So oil has stabilized for the moment. When they next announce the reserves and draw for the week, I sort of expect the price to drop again. No one’s driving in the countries that use the most oil, so crude and gasoline supplies will build again this week. Maybe they won’t build as much, but they will build.

    Sucks to be an oil company employee right now, due to uncertainty of employment. They are an exempt industry, as long as the company remains solvent.

    On another note, new unemployment fillings rose another +3M from last week so now ~6+ million new claims in the last two weeks. Yet, the stock market is up slightly. Same old bad news is good news.

  8. Jerry says:

    Does that make sense? North Sea has a tank. ? You mean the ships that they are going to use for storage that won’t be there? WTI. Just turn off the pump and leave it in the ground. Slow down drilling new wells. Sounds like the story is backward. The only ones that would have to keep running is if their lease demanded monthly minimal production or they would lose it.
    Ethanol plants are shutting down for lack of demand. Which means there isn’t distillers grains to feed the animals. Which is putting up pressure on corn, soy, and canola. 2 weeks ago canola was 257 ton. Last week 308. Price of milk 8 weeks ago was still about $17 per cwt. This week May June are $12.50 Our cost of production about $16 means we don’t borrow much, but we also are not paying down on LAST years borrowing. Which 60 days from now have to start borrowing again for this winters feed. We’re Fucked. Unlike the oil guys, we can’t turn off the cows. Except to MacDonalds.
    The thing that keeps me going: Naked came I into this world, and naked I will go out. In the mean time, We feed a lot of people.

  9. Hadenoughalready says:

    Question: Was the percentage rate on your “card” equal to the discount rate you got on the price per gallon?

  10. Heathen says:

    If you’re directing that towards me ,I got a 40cent “discount” and the card is the Kroger “Loyalty” card and as such it has no interest rate nor can it be used as a credit/Debit card.

  11. Hadenoughalready says:

    In that case, good for you! And I mean it.
    Many see a discount at the gas pumps if you apply for and use their card but they don’t to see the rate of interest after the trial period.

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