Americas News
Storage Capacity Fears Prompt Weaker Crude Values
US oil futures led losses on fears that storage at Cushing, Oklahoma, could reach full capacity soon, Reuters reports.
US crude stocks rose to 518.6 million barrels in the week to April 17, near an all-time record of 535 million barrels set in 2017.
Oil futures marked their third straight week of losses last week - and have fallen for eight of the past nine - with Brent ending down 24% and WTI off around 7%, the report said.
Retail investors were caught off guard last week when the May WTI contract plunged into negative territory for the first time ever two days before expiry as financial traders scrambled to avoid having to take delivery of oil.
The June WTI contract's price fall may have been triggered by investors moving to later months to avoid a similar fate, said Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.
"Anybody who has had length who doesn't have storage contracts has either closed their positions (in June) or rolled far forward ... because it's suicide to carry a position into the close after seeing what happened last month," Nunan was quoted as saying.
Cushing, the delivery point for WTI, was 70% full as of mid-April, although traders said all available space was already leased.
Producers may not be slashing output quickly or deeply enough to buoy prices, especially when global economic output is expected to contract by 2% this year, worse than the financial crisis, while demand has collapsed 30% due to the pandemic.
