• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 3 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 hour Cheaper prices due to renewables - forget it
  • 21 hours e-cars not selling
  • 3 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 14 hours If hydrogen is the answer, you're asking the wrong question
  • 1 hour How Far Have We Really Gotten With Alternative Energy
  • 13 hours CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
Is A New Oil Price War Looming?

Is A New Oil Price War Looming?

Record-breaking U.S. oil production is…

Near-Record Discount For EU Equities Isn't Enough For Investors

Near-Record Discount For EU Equities Isn't Enough For Investors

Even a near-record discount for European…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Why Oil Traders Are Stockpiling Crude

Commodity trading houses and the trading units of oil majors have hired oil storage in South Korea to keep crude in tanks until Chinese and general Asian demand recovers from the blow the coronavirus outbreak has dealt to the market, trading sources tell Reuters.

Glencore, Trafigura, Mercuria, and the oil trading unit of France’s Total have rented a total of nearly 15 million barrels of oil storage tanks from Korea National Oil Corporation (KNOC), the sources told Reuters.

KNOC currently has nine stockpiling bases with a capacity of 136 million barrels, plus another 10 million barrels of underground storage under construction, according to the state-held South Korean company.

At least one trader has also provisionally rented a supertanker for short-term floating storage, the sources said.

The depressed demand flipped the Brent futures curve in early February into contango—the state of the market in which prices for delivery at later dates are higher than prompt prices—a market situation signaling oversupply and one which traders use to store oil for delivery at a later date.

In recent weeks, traders have been scrambling to find buyers of crude cargoes in Asia, as Chinese demand slumped on the coronavirus outbreak and buying interest in broader Asia was muted due to low refining margins. 

Last week, the spot market for Middle East crude cargoes loading in April was virtually non-existent, as demand continued to be depressed due to the coronavirus outbreak while buyers were waiting for cargoes to become even cheaper than they are now.

Traders are now betting on a rebound in crude buying in China and Asia once the situation returns to normal, Reuters’ source said.

But before the situation returns to normal, it could get worse, with Chinese refiners slashing refinery runs and oil suppliers slashing prices for the Asian market.

Chinese crude throughputs have been cut by 1.1 million bpd in Q1, and are now expected to drop by 500,000 bpd year-on-year this quarter, the IEA said last week, noting that the coronavirus will lead to the first quarterly contraction in global oil demand in more than 10 years.

ADVERTISEMENT

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News