Oil tankers are seen anchored in the Pacific Ocean carrying crude oil no one will buy.Credit:Patrick T. Fallon/Bloomberg
The glut has become so severe that refiners and traders have been using ships to store unwanted oil out at sea,with Caltex interim chief executive Matt Halliday warning on Thursday that freight rates for crude-oil tankers were rising as a result.
"Unfortunately,the demand and broader impacts of COVID-19 on our business have become more
acute as we have pushed into the second quarter,"he said."In the current environment we are seeing a weakened crude oil market,with increase in storage on water lifting crude and product freight rates."
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His comments come as the Organisation of Petroleum Exporting Countries (OPEC) said it expected global oil demand to suffer its steepest-ever decline this year,even as some governments begin relaxing coronavirus lockdown restrictions. In its monthly report,OPEC this week said it predicted demand would shrink by more than 9 million barrels a day – or 9.1 per cent – in 2020.
Caltex said retail fuel sales so far this year were 16 per cent lower than the same time last year,while jet fuel was expected to fall as much 90 per cent while travel restrictions remained. The company said it was seeing"demand resilience"from customers in mining,agriculture and road transport sectors."Caltex remains committed to taking necessary action to protect our assets and market-leading position to optimise cash flows and shareholder value,"Mr Halliday said
Also on Thursday,shareholders at the company's 2020 investor meeting voted overwhelmingly in support of Caltex's move to rebadge its petrol stations under the Ampol brand over the next two years."A big part of our future will be our transition back to the iconic and company-owned Ampol brand,"chairman Steven Gregg said.
"Ampol continues to be regarded as a high-quality and trusted brand by Australian consumers and resonates across our key customer segments."