Oil Traders Ditch Third Party Crude Trading

Majors including ExxonMobil, BP, Total, and Russia’s Lukoil are among those shutting out third parties in an attempt to move their own output.

SEATTLE (Oil Monster): In a market oversupplied with crude and related products, traders at big oil companies are focusing on placing their own production and refusing to deal with third party volumes as the cost of storage soars.

Oil companies worldwide are scrambling to find a home for their output as they grapple with the fastest and deepest ever collapse in demand, with the coronavirus pandemic shuttering industry and keeping much of the world at home with little need to drive or fly, while both floating and inland storage is fast filling up.

Majors including ExxonMobil, BP, Total, and Russia’s Lukoil are among those shutting out third parties in an attempt to move their own output and avoid cutting production, five trading sources familiar with the companies’ strategy told Reuters.

“We’re instructed to focus on our group production as a priority and have to cut most of the trading activity due to the risks,” a source with a European major said.

ExxonMobil, BP, Lukoil and Total did not immediately respond to a request for comment.

Refining consultants and traders say the industry will need to cut output by 30% or more within weeks, while smaller and financially weak oil refiners may not emerge from the crisis.

Courtesy: www.reuters.com