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Falling demand, ship storage boost crude
May 14, 2009
Falling demand
The International Energy Agency has predicted fuel consumption this year would be 2.4 million barrels a day, less than last year.
The Opec cartel and the US government’s Energy Information Administration have cut forecasts.
Inventories
Weak demand has generated huge stockpiles of refined products and unrefined crude not just on land, but at sea. Crude inventory levels in the US have reached their
highest levels for 19 years.
In addition, more than 100 barrels of crude and refined products are estimated to be stored in supertankers.
Traders have taken advantage of a weak market structure and cheap freight to buy oil and store it on ships.
This has had the effect of depressing the front end of the curve – creating a structure in which prompt crude contracts are cheaper than those for later delivery.
Source: Opec
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