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Oil Storage So Full That Traders May Stow It on Pipe Networks  | Rigzone

Oil Storage So Full That Traders May Stow It on Pipe Networks  | Rigzone


(Bloomberg) — The glut of U.S. oil is growing so fast that at least one pipeline owner is concerned wily traders may try to stow away crude on its network until prices improve.

Plains All American Pipeline LP is requiring customers to prove they have a buyer or place to offload crude they’re shipping through the company’s pipes, according to people familiar with the matter. The idea is to prevent anyone from using Plains’s network to park oil in lieu of higher prices.

With the key storage hub in Cushing, Oklahoma, already more than half full, concern is rising among investors and oil producers that the surfeit of American crude may overwhelm storage capacity and force companies to shut down wells. Shale explorers are dialing back drilling but it won’t have a meaningful impact on overall crude supplies any time soon.

Similar anxieties are wracking the fuel markets as the Covid-19 outbreak saps demand and foreign producers swamp global markets with oil. Colonial Pipeline Co., operator of the busiest U.S. fuels conduit, last week warned clients that any gasoline or diesel on their system that had no end-user or storage reservation would be sold off to the highest bidder.

–With assistance from Rachel Adams-Heard and Jeffrey Bair.

To contact the reporters on this story:

Joe Carroll in Houston at jcarroll8@bloomberg.net;

Catherine Ngai in New York at cngai16@bloomberg.net;

Michael Bellusci in Toronto at mbellusci2@bloomberg.net

To contact the editors responsible for this story:

Simon Casey at scasey4@bloomberg.net;

David Marino at dmarino4@bloomberg.net

Joe Carroll, Christine Buurma





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