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[CNJRoss]

RT&S 4/2/20
 

Oil glut creating storage problems

 

 

The glut of oil caused by plummeting prices is beginning to outpace capacity for storage. According to a report by Yahoo! Finance, IHS Markit, a Canadian firm, projects that storage space will be gone by the middle of the year.

 

As a result, the industry is now looking at railroad tank cars as storage space. With crude tank farms and supertanker ships just about full, rail storage is seen as a viable alternative.

 

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[CNJRoss]

Bloomberg 4/1/20

Overflowing Oil Tanks Have Traders Eyeing Rail Cars for Storage

 

• Producers, refiners and traders looking to lease tanks cars
• World to run out of oil storage space by mid-year: IHS Market

 

Oil companies are turning to rail cars to stash the crude they can’t sell, as the world runs out of places to store a growing glut of cheap barrels.

 

North American producers, refiners and traders are now looking to store excess oil in rail yards in Texas, Saskatchewan and Manitoba amid the crude market’s historic plunge and collapsing demand, according to people familiar with the matter.

 

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[CNJRoss]

Railway Age 4/21/20

 

Rail Tank Cars As Oil Storage “Unlikely For Now”: Cowen

 

 

Cowen and Company Freight Transportation Analyst Matt Elkott estimates that there is readily available tank car storage capacity for at least 25 million barrels of crude, which can be ramped up in the coming weeks. However, the Canadian railroads do not appear to have a strong appetite for this business, while their U.S. counterparts may be examining the prospects.

 

“Crude storage capacity shortages caused U.S. oil futures to plunge into negative territory,” Elkott says. “Could tank cars come to the rescue? Theoretically, yes, they can be part of the solution. We estimate there are at least 30,000 Class 3 flammable liquid tank cars, each with capacity of more than 30,000 gallons, in North America that could be deployed to hold oil. More equipment could become available in the coming weeks as some cars come off leases with limited renewal prospects, while others roll off manufacturing lines into a depressed-demand market.

 

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