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.
How much product does an oil cargo ship hold? A Panamax container ship (pictured), which passes through the Panama Canal, has enough storage capacity to hold 2 million barrels of product, a conservative estimate, that would mean there is at least 24 million barrels of product afloat without a home in 2 days’ time. As a reference point, in 2019 the United States consumed on average 20 million barrels of petroleum per day. In the 2nd quarter of 2020, during the height of the COVID-19 pandemic, the United States was on pace to consume just 16.2 million barrels of petroleum per day. There is a concern that upcoming Labor Day weekend in the U.S. will result in a resurgence in COVID-19 cases just like we saw after Memorial Day. If the daily COVID-19 cases reported picks up again, this could continue the negative sentiment in the oil space we have seen recently and keep a lid on prices.