Traders are using giant supertankers to store 160 million barrels of oil as the coronavirus torpedoes demand

• A record amount of crude oil is being stored on container ships around the world as oil traders scramble to find places to keep their product amid a rapid decline in global demand.
• Oil demand has fallen sharply thanks to the coronavirus pandemic, with less fuel being used for journeys by car and air, and manufacturers shutting down production.
• 160 million barrels of oil are now being stored on ships, 60% more than the previous record, Reuters reported.
• WTI oil, the US benchmark, hit a multi-decade low Monday, falling below $13 per barrel.
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A record amount of crude oil is being stored on container ships around the world as oil traders scramble to find places to keep their product amid a rapid decline in global demand caused by the coronavirus pandemic.

Reuters reported over the weekend that traders are frantically exploring storage options for crude oil both on land and at sea, citing multiple shipping sources.

There are now 160 million barrels of oil being stored on tankers, Reuters reported, a record amount. Previously, the largest amount of oil stored at sea was around 100 million barrels during the 2009 financial crisis, the report added.

Much of the oil is being stored on 60 super tankers, also known as very large crude carriers (VLCCs), which have a capacity to hold more than 2 million barrels each, Reuters reported.

This represents an increase in VLCC usage in recent weeks as traders scramble to find space for oil that is not being used.

25 to 40 VLCCs were already in use at the start of April, compared to less than 10 VLCCs in February, according to Reuters, which cited sources.

The sources added smaller tankers were also being deployed in order to increase the volumes that can be stored.

"This is an unprecedented time in the history of tankers and while VLCC tanker storage is garnering the headlines, smaller crude and product tankers are also being used for storage," Gregory Lewis, a shipping analyst with BTIG told Reuters.

The coronavirus pandemic has sharply decreased oil demand with consumers using personal vehicles less, the number of commercial flights being operated dropping dramatically, and many manufacturers shutting down production.

The closely-watched Baker Hughes oil rig report showed that as of Friday there were 559 active oil rigs in North America, down from 1078 at the same time last year.

Plunging oil prices come despite a recent deal signed by OPEC and its allies to reduce the supply of oil by almost 10 million barrels of oil per day as countries scramble to mitigate the economic impact of coronavirus.

West Texas Intermediate oil — the US benchmark — reached a 22-year- low on Monday at less than $13 per barrel.

Oil markets enter contango

Slowing demand for oil has pushed the US oil to enter "contango," a situation where spot prices are lower than the futures prices. A contango indicates slowing demand for oil in the interim.

The weak prices have caused an analyst to warn that WTI could crash to $10 a barrel as US rig counts, the number of active oil producing facilities have also fallen to a four-year low.

Naeem Aslam, chief market analyst at Avadetrade, said: "The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut."