With storage tight on land, there are an estimated 80 million barrels of oil being held in large tankers offshore, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
‘‘We’re filling up every crevice of storage that anybody can find,’’ he said. ‘‘The pipelines are filled up, the terminals are filled up. Refiners are amply supplied. This is a market that definitely has a surplus.’’
If crude at sea has reached 80 million barrels, it could nearly supply the entire globe for a day.
Weighing on all the contracts is a severe recession in developed countries and a slump in global oil demand. Hundreds of U.S. companies report fourth quarter earnings this week and could cement fears that the global economy is worsening.
Schlumberger Ltd., the U.S. oil services giant, leads off the energy sector when it reports earnings Friday. It has already warned of job cuts.
Traders fully expect that the March contract will follow the downward arch of the contract that expires today if there is no morale-boosting economic news soon.
‘‘We need to see enough improvement in demand to absorb some of these excess supplies,’’ Ritterbusch said.
Trader and analyst Stephen Schork said the current gloomy economic indicators in the United States — such as the rising jobless rate and falling industrial production — did not point to a quick recovery.
‘‘Bottom line, we have high supply and low demand. Why should the March Nymex crude oil not trade below $40 ... or 30?’’ Schork wrote in his daily market comment.
Alaron Trading analyst Phil Flynn places more importance on the futures contract for April and the months ahead, noting that many refineries schedule maintenance during the February-March timeframe.
April contracts, he said, are the start of the key summer driving season.
‘‘There’s still a debate as to whether or not demand is going to perk up a little bit or how quickly the economy is going to come back. But right now, if you want oil, there’s plenty of it out there to get.’’