Crude oil prices could fall sharply due to falling demand from oil refiners, according to analysts at Goldman Sachs. Lack of space in petroleum product storage facilities could lead to a sharp decline in oil prices

Photo: Egor Aleev/TASS

As the New York Times writes, citing Goldman Sachs analysts, petroleum product inventories in the US and Europe and crude oil refining volumes are currently close to historical maximums, while there is very little free space left in storage facilities. The situation is complicated by the modest growth rates of demand for petroleum products (especially gasoline) and the increase in their supplies from the East.

“What is happening is reminiscent of the events of 1998 and 2009, when petroleum product storage facilities overflowed and crude oil prices plummeted,” warn experts at Goldman Sachs.

The investment bank's report also emphasizes that global oil production currently significantly exceeds global demand for it and is unlikely to reach equilibrium in 2016.

Prices on the global oil market are still under pressure from several factors, including the level of reserves, senior vice president of Argus Media Vyacheslav Mishchenko confirmed to RBC. The increase in supply has decreased, but still exceeds demand: in the first quarter of 2015, supply was 3.2 million barrels. more, in the second quarter - by 2.7 million barrels, in the third quarter - by 1.7 million barrels. In total, in the first nine months of 2015, oil supply exceeded demand by 180 million barrels, he calculated. Almost all oil-producing regions and countries are operating at maximum (Russia produces 10.74 million barrels per day, the USA - 9.1 million barrels, etc.), as a result, the volume and profitability of refining is growing. This was all a result of stocks being at their maximum.

In March 2015, the Wall Street Journal (WSJ) reported that the excess of oil production over the consumption of “black gold” is fraught with a sharp drop in prices, which by that time had more or less stabilized at $60 per barrel, due to a shortage of space in oil storage facilities.

Experts from the publication then warned that crude oil reserves in the United States had reached their highest level in the last 80 years, as a result of which oil storage facilities were approximately 70% full. In other countries, according to WSJ, there is even less free space left in storage: in Japan - no more than 20%, and in European countries - at best 10%.

The WSJ's prediction came true: by the end of summer, the price of a barrel of Brent dropped below $50, reaching a low of $42.23. During today's trading on the ICE exchange, the price of Brent oil futures for delivery in December 2015 fluctuates at $48 per barrel.

Previously, Bank of America Merrill Lynch experts predicted that due to a shortage of storage space, Brent prices would fall to $31 per barrel by the end of March 2015, but this has not yet happened.

On October 23, First Deputy Chairman of the Central Bank Dmitry Tulin said that the Bank of Russia included in the pessimistic scenario for the development of the situation in the Russian economy the possibility of oil prices falling “very below” $40 per barrel.

Earlier, the Central Bank reported that the risk scenario envisages maintaining the price of oil in 2016–2018 “below $40 per barrel.” According to RBC sources, at a meeting with Prime Minister Dmitry Medvedev, a representative of the Central Bank explained that when conducting stress tests, they were based on a price of $35 per barrel, but did not disclose the amount so as “not to scare people . ”

Goldman Sachs predicted a new collapse in oil prices