ISLAMABAD: After Monday's historic crash which left the West Texas Intermediate (WTI) US benchmark settling at -$37, panic is beginning to spread through markets, with Brent crude oil prices plummeting by over 20 percent into the $18 range in early morning trading on Tuesday. It closed on at $19.33
The drop, sparked by a perfect storm of COVID-19 fueled demand destruction and global crude storage facilities reaching their limits, is unlike anything markets have ever seen. And it's left every even the most. veteran industry players scratching their heads.
From Asia to North America, all over the world oil producers and traders are looking for just one thing - a place to put their unwanted products. Supertankers are in high demand and often left idling offshore as on-shore facilities are out of space. In the North Sea, for example, vessels have been parked for days, loaded with gasoline and jet fuel with nowhere to go.
Even the world's largest oil storage firm, Vopak, which operates three main facilities in Singapore, Rotterdam and Fujairah, is saying they're at capacity.
In addition to the storage crisis and COVID-19 fueled demand destruction, a wave of oil from Saudi Arabia was heading to US shores. And with little commercial space available, the additional crude could potentially force deeper production cuts in the US shale patch in the coming months, an issue that has been the center of a heated debate in Texas.
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