NEW YORK — The U.S. has so much crude that it is running out of places to put it, and that could drive oil and gasoline prices even lower in the coming months.
For the past seven weeks, the U.S. has been producing and importing an average of 1 million more barrels of oil every day than it is consuming. That extra crude is flowing into storage tanks, especially at the country’s main trading hub, in Cushing, Okla., pushing U.S. supplies to their highest point in at least 80 years, the Energy Department reported last week.
If this keeps up, storage tanks could approach their operational limits, known in the industry as “tank tops,” by mid-April and send the price of crude — and probably gasoline, too — plummeting.
“We are running out of storage capacity in the U.S.,” Ed Morse, head of commodities research at Citibank, said at a recent symposium at the Council on Foreign Relations in New York.
Morse has suggested oil could fall to $20 a barrel from the current $50.
Other analysts agree for a number of reasons:
• U.S. oil production continues to rise. Companies are cutting back on new drilling, but that won’t reduce supplies until later this year.
• The new oil being produced is light, sweet crude, which is a type many U.S. refineries are not designed to process.
• Foreign oil continues to flow into the U.S.
• This is the slowest time of year for gasoline demand, so refiners typically reduce or stop production to perform maintenance.
