A record oil supply glut is putting pressure on storage capacity and could push oil and gasoline prices even lower in coming months.
An Energy Department report released last week found that U.S. crude supplies are at their highest level in 80 years and are pushing storage capacity to the limit.
During the last seven weeks the United States has been producing and importing an average of 1 million extra barrels of oil per day with U.S. crude supplies hitting a record 434.1 million barrels during the week ending on February 20.
U.S. crude production also climbed to a record high 9.29 million barrels per day that week, the highest weekly production level on record and the highest level since 1973 in monthly data.
“The fact of the matter is we are running out of storage capacity in the U.S.,” head commodities research at Citibank Ed Morse said.
Market data firm Genscape estimates that the storage tanks in Cushing, Oklahoma are currently about-two thirds full.
Supplies are growing at “the highest rate we have ever seen at Cushing,” Genscape analyst Hillary Stevenson told the AP.
Storage capacity at Cushing as well as other large terminals near Houston and in St. James, Louisiana are currently being expanded to accommodate growing supplies.
Last month the International Energy Agency said U.S. production will grow to 5.2 million barrels per day by 2020.
The agency also expects global oil inventories to hit record highs before capital expenditure cuts begin to shrink supplies.
In January oil tanker owners reported a surge in demand for large vessels as traders look to take advantage of low prices to stockpile supplies.