Sheen on the Oil Slick Getting Darker
David Haggith
TheGreatRecession.info
March 1, 2016
Last week, I wrote that the day would come soon when oil prices would take another nasty dive because there is nowhere left to store oil, causing the spot price for immediately delivery to dive toward the zero bound. This week we see how close that day is as oil continues to be oversupplied by about a million barrels a day.
Reasoning simple: When all ships, tank cars, tank trucks and tank farms are finally full, immediate delivery of oil will be nothing but a liability. That kind of delivery is called “an oil spill” because all you can do is pump it onto the ground or into the sea … or start filling swimming pools, as one oil industry analyst said is the next step. Production will have to slow to whatever the rate of consumption is, as it will become a situation of one tank used before one tank is bought.
Oil practically spills over in Rotterdam
The Wall Street Journal reported on Monday that oil tankers are backing up at the world’s largest oil seaport. In fact, buyers and sellers of oil are increasingly sending tankers on longer voyages just to avoid a pile-up of tankers at several ports.
“Up to 50 oil tankers are waiting to unload cargo in the port of Rotterdam, the highest number since 2009 and another sign that, amid a glut, crude is struggling to find a home. (WSJ)”
There is that magic number that appears in almost all economic news this year — “since 2009” or “since 2008,” in other words “since the worst of the Great Recession” or “since the start of the Great recession.”
Storage in Rotterdam is nearing its limits. Ships are bobbling around out at sea waiting to find a port where they can unload their crude. The world’s largest oil storage company reports that its storage tank capacity in the Netherlands is now at 96% full.
The Rest…HERE
