Stalled global economic recovery fuels fresh buildup of oil inventory
- Major oil traders book offshore storage facilities as global economic recovery stalls.
- Onshore facilities remain close to capacity on weak demand.
Major oil traders like Trafigura, Vitol, Litasco, and Glencore are again booking tankers to store millions of barrels of crude oil and refined fuels at sea with the global economic recovery from the coronavirus pandemic showing signs of stalling.
Trading house Trafigura has chartered at least five of the so-called very large crude-oil carriers (VLCCs), each capable of storing 2 million oil barrels, according to trading sources and shipping data.
According to Reuters, traders are opting for offshore storage facilities, as onshore storage remains close to capacity on weak demand, according to a Reuters article.
Offshore storage facilities were filled in April as the coronavirus lockdown restrictions imposed across the globe brought the economic activity to a standstill.
As such, oil prices tanked in April with the then front-month west texas intermediate (WTI) futures contract falling to at least $30 below zero.
At press time, WTI is trading at $37.80, having peaked at $43.75 in August.