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SpaceX Dragon capsule delivers astronauts to international space station. Niantic kicks off Lightship to build AR App. COP Countries launch plan for green shipping corridors. Demand for fossil fuels has plunged amid the widespread lockdowns and traders are finding it difficult to store the oil flooding the market. Related News. Why would they do that? Because it's expensive to shut down or reopen a well, and may actually be cheaper to simply pay someone to remove it, especially if you believe prices may turn higher in a few months.
But when all the storage is full — and it's probably 30 to 60 days away from being tapped out anywhere in North America — it's not inconceivable that other, more expensive grades, go negative in more places, perhaps even larger parts of Texas.
The market isn't there yet, but with less a billion barrels of storage available, and tens of millions of barrels piling up each day, the math says it won't be long. A barrel of oil is 42 gallons, or about 5, fluid ounces. That figure has been whittled down to 19 today.
The remaining facilities offset that decline by increasing their individual capacity, but the industry is far from growing as a whole.
Because of fuel efficiency improvements in North America, demand for crude and distillates like gasoline, diesel and jet fuel is projected to be essentially flat moving forward. Unlike the international market for crude, refining is dictated by local markets, and that gives refining among the slimmest profit margins of the entire energy supply chain. Over the past decade, estimates suggest that pre-tax returns in the refining industry have averaged 11 per cent per year, Conference Board economist Todd Crawford noted in a recent report.
Even in oil-rich Alberta, the oil refining business accounts for only about 0. With almost 60 refineries sitting largely idle on the U. A much less talked about factor that's weighing on oil prices in Alberta is a new fuel standard for the marine shipping industry. The policy generally will target heavy sour crudes like those produced in Alberta in favour of low-sulphur sweet oil. Some shipping companies have said they will install scrubbers in the exhaust stacks of their vessels instead of purchasing lower sulphur fuels.
Some experts also say refineries in North America are sophisticated enough to reduce the sulphur content when they process Canadian heavy oil. Regardless, the sulphur restrictions are still weighing on future prices of heavy oils around the world because the potential impact is unknown. The backlog of oil is expected to take several months to clear once U. The export issue should improve in about 12 months after more pipeline capacity is added and crude-by-rail shipments climb.
The new sulphur rules, however, are a new potential problem for an industry that doesn't need one. Pseudonyms will no longer be permitted.
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