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Oil Storage Crisis Fading

Oil Storage Crisis Fading
Oil Storage Crisis Fading

While the global oil market remains in a dire situation, it is starting to look like the nightmare scenario envisioned for the past month might just be averted.
The industry feared a flood of unwanted crude would overwhelm the world’s storage tanks as fuel demand was shattered by the coronavirus. 
Once that “storage wall” was hit, producers would be forced into a chaotic wave of potentially damaging shut-ins at oil wells, Bloomberg reported.
In recent days, however, the alarm is starting to subside.
After the brutal price crash, producers have cut output on a historic scale, including unprecedented reductions by the OPEC+ alliance. Now demand is starting to creep higher as governments ease lockdowns, letting drivers back on the roads.
Though a substantial surplus remains -- prompting Saudi Arabia to announce additional output cuts on Monday -- the threat of a storage blow-out has receded.
“It looks like price signals” have” worked their magic and the market has managed to re-balance and avert the worst,” said Antoine Halff, chief analyst at energy data provider Kayrros SAS.
In some critical locations, such as India and South Korea, storage has already been strained to its limits. Space at the US crude hub in Cushing, Oklahoma, became so scare that crude prices briefly dropped below zero last month for the first time on record. 

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