US Crude Oil Below Zero Has Benefited Russia and Saudi Arabia

US Crude Oil Below Zero Has Benefited Russia and Saudi Arabia

The travel restriction, one of the measures introduced to address the Coronavirus outbreak, has affected about 4 billion people around the world. As a result, the demand for oil fell dramatically. U.S. crude, as well as Saudi Arabia's light crude oil, the United Arab Emirates, Nigeria, Russia, and Britain's Brent oil, are all struggling in the oil-strapped market due to production falling at a much lower rate than demand. However, the situation WTI is in is much riskier than in other countries. Crude oil storage sites in the United States are shrinking more rapidly than in other countries. The Cushing, Oklahoma warehouse, a delivery point for historic WTI futures, has completed 90 million barrels of its 60 million-barrel capacity as of yesterday. STORAGE NIGHTMARE There are also pipelines, wagons, and strategic oil reserves with a capacity of 75 million barrels to store WTI crude oil, but the US currently has only about 150-200 million barrels. As of last week, production in the United States fell 800,000 barrels per day, down from a record 12.3 million barrels per day level in March. All these results have made WTI difficult to achieve in the face of the Saudis and Russians ' goals of growing their Sunday share since the outbreak ended. The Saudi and Russian strategy seems to be to look like a supporter by pledging cuts to Trump but not to make cuts in a way that distorts the current market and customers they have.