U.S. oil companies have begun recovering their crude oil from government storage tanks, suggesting that the glut that forced them to store it there in the first place is now losing.
Companies have extracted about 2.2 million tonnes of raw material since the beginning of the month, Reuters reports, citing government figures. That’s out of some of the 23 million barrels that oil producers had to store at government tanks as they ran out of storage space after the fall in demand.
Storage space was leased in April after oil prices fell below zero for the first time in history as traders escaped their positions before the contract expired. Despite the short duration of this particular mini-crisis, foundations remained difficult as companies just began to cut production, which sown them with a lot of oil that they could still sell or store.
President Trump sought to help by ordering the Department of Energy to buy some 77 million barrels from the wrestling industry. However, that assignment was never completed. Saving storage space was the only viable alternative.
At the time, there were concerns that this extra stream of oil in the Strategic Petroleum Reserve would push its occupancy rate too high, leave nothing available and send oil prices down again. Although this did not happen due to the production constraints created by American producers, prices remained depressed for a while due to these concerns about availability over storage space.
This makes the news that Exxon, Chevron, and the other six companies that rent SPR storage space take it better. However, those who see the Energy Inventory’s weekly inventory report may want to keep it in mind in case one of the following reports is not completely dismissed.
By Irina Slav for Oilprice.com
More top reads from Oilprice.com:
Back to the home page
.
