Oil prices fall on brimming storage, global storage onshore was estimated to be about 85% full as of last week

Oil prices plunged for a second day in a row on Tuesday on concerns about dwindling global capacity to store more crude and fears that demand may be slow to recover even after countries ease restrictions to combat the coronavirus pandemic.

Brent crude fell 83 cents, or 4.1%, to $19.16 a barrel at 0808 GMT, following a 6.8% slide on Monday.

U.S. West Texas Intermediate (WTI) crude was down $2.57, or 20%, at $10.21 a barrel. The contract plunged 25% on Monday.

Analysts said part of the WTI decline was due to retail investment vehicles like exchange-traded funds selling out of the front-month June contract and buying into months later to avert massive losses like last week, when WTI fell below zero.

Although the world economy may start to recover as more countries allow businesses to reopen, analysts say prospects for oil prices remains gloomy with so much crude in storage and supply cuts still not deep enough to counter plummeting demand.

Russian Energy Minister Alexander Novak said on Tuesday oil markets would start balancing out once an output deal took effect, but no significant rise in prices was likely in the near future due to high levels of global storage.

Global storage onshore was estimated to be about 85% full as of last week, according to data from consultancy Kpler.

In a sign of the energy industry’s desperation for places to store petroleum, oil traders are resorting to hiring expensive U.S. vessels to store gasoline or ship fuel overseas, shipping sources said.

Oil prices fall on brimming storage, bleak recovery prospects, Reuters, Apr 28