Due to the plummeting demand for oil, more and more oil storage areas are filling up.
WiredPRNews.com – The recession has brought on an unexpected reduction in the demand for oil that has left oil tankers around the round with no place to go. As reported by the Associated Press (AP), producers and traders are now being forced to come to terms with having to deal with storing their crude oil until demand increases enough for profits to be made.
As noted in the AP report, farms used for oil storage in the U.S. are practically full, with storage being the latest strategy for those in the industry. However, for some it may become something that proves to not be a worthwhile endeavor. Phil Flynn with Alaron Trading Corp. is quoted in the report as stating, “If you’re sitting on a bunch of oil and you’re stuck paying storage and insurance, and you can’t find a buyer, you may have to sell it at a discount just to get rid of it.”
Antoine Halff, an analyst for Newedge, is further quoted as stating, “Nobody expected this… The majority of people out there thought the market would keep rising to $200, even $250, a barrel. They were tripping over each other to pick a higher forecast.”
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