The scene of empty tanks in Cushing, Oklahoma, holds about 1.4 million barrels ready for leasing as of July, versus roughly 12 cents a barrel per month in stark contrast to at least 60 cents when there was little storage space left last year.
Meanwhile, shale oil producers are sticking to their pledges to focus on balancing their books and boosting returns for shareholders, rather than increasing production. US production is down 15% from its peak last year, limiting flows to the storage hub.
Therefore, merchants are quickly draining their storage tanks to supply the refineries with every barrel of raw materials they need.
Empty tanks are a model for a market where demand exceeds supplies and traders get a premium for the closest deliveries, making it unprofitable to keep oil in storage with global oil demand expected to recover to pre-pandemic levels late next year according to the International Energy Agency as OPEC continues. And its allies to keep part of their production capacity out of service.