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Low demand for crude oil! 27 oil tankers are acting as storage tanks off the coast of California, even FTX's crude oil contracts are lacking interest.

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Low demand for crude oil! 27 oil tankers are acting as storage tanks off the coast of California, even FTX

According to Bloomberg, U.S. drilling activity is already down by half in January. Despite Russia, OPEC, and major oil-producing countries agreeing to cut production, the demand for oil remains extremely low due to the economic downturn caused by the Great Lockdown.

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According to a report by Bloomberg, U.S. oil drilling activity is now at half of January's levels. Despite decisions by Russia, OPEC, and major oil-producing countries to cut production, the demand for oil remains extremely low due to the economic downturn caused by the Great Lockdown.

Current U.S. oil drilling activity is at 50% of January levels (source: Bloomberg)

In the past week, due to oversupply and extremely low demand, oil companies purchasing physical delivery of crude oil futures for May are facing a lack of storage in oil tanks. The buying interest for WTI crude oil futures has completely disappeared, leading to negative trading prices.

WTI crude oil futures experience a major price collapse (source: Bloomberg)

As seen in the video below, there are currently 27 oil tankers off the coast of Southern California, preparing to serve as offshore oil tanks due to the overflowing onshore tanks, indicating a significant gap between supply and demand for crude oil.

Reportedly, cryptocurrency exchange FTX also joined the discussion by launching oil contract products on the 22nd, using WTI spot trading prices as the basis for trading. However, it seems that the crypto community is not interested in betting on oil. Just two days after its launch, the trading volume of the oil contract product has significantly decreased, already at 50% of the first two days. The longevity of this product remains to be seen, and its ability to attract users to participate in trading will depend on the volatility of WTI after the opening next week.

FTX oil contract trading volume gradually decreases (source: FTX)

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