Even in Texas, there actually is such a thing as too much oil. Due to a worldwide drop in demand because of the coronavirus pandemic, crude oil supplies are building up with nowhere to go. "Everyone has pretty much stopped in their tracks moving around, traveling, going to work, and now we see this drop-off in demand," says Kym Bolado, host of KTRH's In the Oil Patch Radio Show. "And as a result of that on a world scale, it's causing havoc with where do we put the oil that's being produced right now, and placement for it is quickly filling up."
Indeed, oil industry analysts project that supply will exceed demand by 12.4 million barrels per day in the second quarter. "There's just really not any place to put this (oil), and of course this is why we've already started to see a reduction in drilling, and will continue to see this," says Bolado. "Now we're actually seeing huge tankers that can hold up to 80 million gallons anchored in areas off of Texas, Scotland, and elsewhere around the world."
The coronavirus is a huge factor in driving down oil prices and demand, but it is not the only one. Saudi Arabia and Russia are in the middle of a standoff over proposed OPEC production cuts, with both countries flooding the market in order to drive down prices and force the other to negotiate. "We are encouraging President Trump and his administration to get involved right now, and to come to some kind of agreement with Saudi Arabia and Russia to get them back to the table and get us out of this price war," says Bolado.
In the meantime, the oil market continues to dwindle. On Monday, the price of crude reached an 18-year low of just over $20 a barrel. "It's really about supply and demand," says Bolado. "There's a glut, so we really have to see that get used up before (increased production) will start to occur."