The US Energy Information Administration (EIA) last week reported that storage tanks in Cushing, Oklahoma, the key crude oil hub in the country, were just 70% full as of mid-April. However, traders said that even the left space is fully booked by firms that are delivering crude to the hub right now.
Data from the American Petroleum Institute (API) released on Tuesday showed a 4.9 million-barrel build Cushing stockpile as of April 17. This means that the hub held about 59.5 million barrels of crude and had about 16 million barrels of available space. Cushing storage is expected to reach tank tops by mid- to late May.
With oil demand plunging by 30% due to the coronavirus pandemic and supply continues to flood the market, buyers have no choice other than sticking oil in storage tanks. However, they are fully leased. All of the terminal’s storage has been contracted, according to Ernie Barsamian, the CEO of New Jersey-based terminal storage clearinghouse The Tank Tiger.
This realization sparked a panic among traders and funds managers on Monday which in turn, caused a massive sell off that pushed US May crude futures into negative territory for the first time in history. Analysts expected that negative oil prices would recur in the coming months. The June contract remained in positive territory but it tumbled 43% on Tuesday to $11.57/barrel.
