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Terminal News

Storage capacity constraints bring market volatility

Storage capacity constraints as a result of a significantly oversupplied crude market will bring more market volatility, according to Goldman Sachs.

In an interview with CNBC's 'Closing Bell', Jeffery Currie, global head of commodities research said that volatility will be a market trend for the future as will reaching storage capacity constraints.

He says: 'We think this is going to be a feature of the market: you just continue to slam against those capacity constraints in the coming months, creating a lot of volatility without any real trend.

'It just means more volatility, more grinding against those capacity constraints until finally you rebalance the market.'

He told the news broadcaster that at Cushing, Oklahoma, there is about three million barrels of spare capacity left, out of 89 to 90 million barrels.

He adds: 'The fact that we saw cash prices separate from forward prices tell us that we broke the cash-and-carry arb.'

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