Oil Storage Tanks Are Filling Up, Making Production Cuts ‘Inevitable’ in Canada
- Inventory levels could be breached in two to three weeks
- Producers could be forced to pay customers to take oil away
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Rock-bottom prices for Canadian oil and a lack of demand are setting the stage for “inevitable” production cuts, according to Goldman Sachs, which says the industry could run out of storage space within weeks.
Landlocked Canadian crude could see prices go negative -- meaning producers would pay customers to take the oil, analysts led by Emily Chieng said in a note to clients. Shipping it out by rail isn’t economic, and increased production from OPEC nations could displace demand for Canada’s barrels, Chieng said.