With oil for May delivery trading at a steep discount to future months -- a structure known as contango -- more firms are hoarding barrels rather than sell at a loss. But crude tanks and supertankers are filling up fast, with the world projected to run out of storage space by the middle of the year, according to IHS Markit. In Canada, tank-tops could be breached within two to three weeks, Goldman Sachs Group said, while U.S. stockpiles last week rose for the 10th week, increasing by the most in three years.
[...]
This time around, market dynamics are even more favorable to storage and rail cars are, for now, a viable option. Leasing costs have declined from around $1,200 a few months ago to less than $700 now, as demand for shipping crude has dwindled amid the price rout, the people said.
Storing a loaded rail car would cost $300-$450 a month, putting the total bill at around $1.50 a barrel per month, Barsamian said. “If you can get the crude cheap enough, it’s game on.
[...]
Under proper conditions, rail cars are a safe alternative to more conventional modes of storage. But getting large volumes of oil to rail yards raises concerns about leaks and spills, according Jared Margolis, a senior attorney at the Center for Biological Diversity.
“That’s the big risk,” he said. “Moving it around in order to store it.”
From the article:
[...]
[...]