• 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
  • 4 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 7 days Does Toyota Know Something That We Don’t?
  • 1 day America should go after China but it should be done in a wise way.
  • 7 days World could get rid of Putin and Russia but nobody is bold enough
  • 9 days China is using Chinese Names of Cities on their Border with Russia.
  • 10 days Russian Officials Voice Concerns About Chinese-Funded Rail Line
  • 10 days OPINION: Putin’s Genocidal Myth A scholarly treatise on the thousands of years of Ukrainian history. RCW
  • 10 days CHINA Economy IMPLODING - Fastest Price Fall in 14 Years & Stock Market Crashes to 5 Year Low
  • 9 days CHINA Economy Disaster - Employee Shortages, Retirement Age, Birth Rate & Ageing Population
  • 23 hours How Far Have We Really Gotten With Alternative Energy
  • 10 days Putin and Xi Bet on the Global South
  • 10 days "(Another) Putin Critic 'Falls' Out Of Window, Dies"
  • 11 days United States LNG Exports Reach Third Place
  • 11 days Biden's $2 trillion Plan for Insfrastructure and Jobs
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Fragile Oil Markets Under Threat From 50 Million Barrels Of Saudi Crude

Some 50 million barrels of Saudi crude oil are approaching U.S. shores just as the Energy Information Administration reported the first inventory decline in months. This, according to Bloomberg, could reverse a tentative recovery in oil prices.

On Wednesday, the EIA reported that commercial crude oil inventories had declined by some 700,000 barrels in the week to May 8. The modest draw gave hope that the oil storage problem may soon begin to resolve itself even if total stockpiles were still above the five-year average for the season.

Now, shipping data from Bloomberg shows more than 50 million barrels of Saudi crude are about to arrive on the Gulf Coast and the West Coast by the end of June. Unless U.S. production falls sharply during this period and demand improves markedly, both at home and abroad, these barrels would need to be stored, pushing total inventories up once again. And this will pressure prices.

"The current contango exhibited by NYMEX's futures on WTI suggests a degree of recovery in the second half of the year. There's basically no incentive now for anybody to expand production, so logically the supply glut will gradually improve," said Michael Stark, market analyst at Exness.

Yet the second half of the year is still far away, and the immediate outlook remains grim. An additional 50+ million barrels of oil would undoubtedly have a strong negative impact on prices.

"If all the Saudi tankers unload, the crude they carry will offset during May almost all of the production reductions from March levels, effectively maintaining the current high storage filling rates," Rystad Energy senior oil market analyst Paola Rodriguez-Masiu said in a note, as quoted by Bloomberg.

The tankers were loaded before OPEC+ struck a new agreement to take 9.7 million bpd off the market in May and June when Saudi Arabia had embarked on an aggressive price war for market share after the previous OPEC+ deal collapsed in early March. Now, with demand still weak, they have few options: dock and unload or turn into floating storage, at a cost.

By Irina Slav for Oilprice.com

ADVERTISEMENT

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