Chinese investors filling up oil storage tanks in hope of gaining big when prices surge

Chinese investors are filling up commercial oil storage tanks held by the Shanghai futures exchange in the hope of gaining big when the oil prices surge again. According to reports, the entire storage facility of the Shanghai futures exchange is expected to be filled by the end of June. Shanghai futures exchange has reportedly doubled its storage facility to 57 million barrels in the past six weeks, ever since the oil prices plummeted in the international market. 

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A state oil official told the press that the investors who are pouring money are not well known in the oil industry and are supported by rich individuals who are linked to brokerage firms. The official said that the investors are called 'hermit investors' because of their solitary nature. As per reports, nearly 50 million barrels of oil costing $1.8 billion will be pumped into delivery points managed by International Energy Exchange (INE) between April and June. Most of the oil that is being pumped into the exchange are Iraq's Basra Light and Oman crude, according to reports.

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Oil prices and demand

The demand for crude oil fell drastically because of coronavirus pandemic as it has forced many countries to go into a complete lockdown and put a ban on travel as well as on the movement of people. Factories and other oil-based facilities have been shut in many of these countries where lockdown is in place to contain the spread of the virus. Crude oil prices dropped to its lowest in February this year after two of the biggest exporter Saudi Arabia and Russia failed to reach an agreement on production cuts.  

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(Image Credit: AP)