Dwindling Oil Storage Capacity and Impacts on Energy Companies

Commodity prices have fallen precipitously in the first quarter of 2020 as crude producers are getting hit on both the supply side — with Russia and Saudi Arabia seeking to flood the market to capture additional market share — and the demand side — with shelter-in-place orders and other travel restrictions from the ongoing coronavirus crisis decimating global oil demand.

Both West Texas Intermediate and Brent Crude prices have collapsed by almost 70% from recent highs resulting in WTI crude front-month contracts currently trading near $20 a barrel. Further, the massive decline in index pricing does not fully reflect the extent of domestic pricing pressure as, in many basins, the downward basis differentials have increased 5–15x compared to previous levels.