Tanker queues at oil storage hubs signal fresh price falls
The queue of ships waiting outside Europe's biggest port and oil-trading hub of Rotterdam has grown to the longest in seven years as a global supply glut fills storage capacity.
As many as 50 oil tankers, twice as many as normal, are waiting outside Rotterdam because storage sites are almost full, the port's spokesman said yesterday.
"This is a clear sign of the oversupply filling up storage to the brim," Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich, said.
"People are preferring to store oil rather than cut production. These are bearish signs."
The world is so awash with oil that BP chief executive Bob Dudley said last month people will be filling up their "swimming pools" with it this year. Traders buying up cheap oil, storing it and hoping to sell later. As onshore storage fills up, companies could start stockpiling at sea in a repeat of a strategy last seen in 2008 and 2009.
Crude oil in storage tanks in Rotterdam stood at 51.3m barrels on February 19, the highest for the time of year in data starting in 2013, according to Genscape, which monitors inventories. Royal Vopak, the world's largest oil-storage company, last week reported a fourth-quarter occupancy rate of 96pc at its 11 terminals compared with 85pc a year earlier.
The situation is mirrored in the biggest US storage hub at Cushing, Oklahoma, and elsewhere. "In China, given high oil imports, there are too many ships and the infrastructure seems not be able to handle that."
As storage tanks keep filling up, oil prices for immediate delivery will probably fall, deepening the market crisis. (Bloomberg)