For the 2021 calendar year, there will be 5.8 million barrels per day crude production cuts. These cuts are an effort to balance the current oversupply due to COVID-19 with an estimated demand forecast for the year.
The most recent WTI drop of 2.9% is the largest in a month. Supply versus demand continues to be a curious topic that is the main driver of the current crude oil situation. Oversupply of crude oil in 2020 continues as just in the past few days in the North Sea there are a combined 12 cargoes that have yet to find a buyer suggesting slow demand is taking place in the region.
Analysts are getting increasingly worried that the refining industry will not be prepared in time to meet the lower sulfur regulation under the new International Maritime Organization (IMO) set to begin January 1, 2020 and will subsequently increase diesel prices in relation to crude oil.
It’s been almost eight days since the chemical fire, outside of Deer Park, Texas, began at a petrochemical storage facility near the Houston Ship Channel that connects to the Gulf of Mexico. The fire that broke out over a week ago at Mitsui & Co’s Intercontinental Terminal sites (ITC) has caused major damage to 11 tanks each holding up to 3 million gallons of fuel used to make gasoline and plastics. After emergency workers were able to get the fire extinguished, flames began to erupt again which halted all efforts to remove any volatile fuels that leaked after a containment wall breached.