Storage broker: Global IT outage of July caused California fuel storage problems

Storage broker The Tank Tiger said this week that the CrowdStrike IT failure last month, which grounded scores of flights, created new problems in California's fuel markets. U.S. traders were forced to store jet fuel bound for California on waterborne tanks, forcing them to store fuel for California on tankers.

The Californian policies to end fossil fuel use have made it difficult to set up new oil and gas pipelines.

The Tank Tiger, a clearinghouse for terminal storage in the United States, said that there was no space in California to store petroleum products.

California is a major oil trading hub on the U.S. West Coast, which keeps demand high. This makes the region more susceptible to large fuel price fluctuations during disruptions such as an IT outage or refinery problems.

Barsamian stated that "despite the high demand for new tanks, the permitting process (in California) can be cumbersome." He said that California's storage costs are double those of trading hubs like New York Harbor and Houston.

California's Certified Unified Program Agency (CUPA), responsible for the implementation of the Aboveground Petroleum Storage Act Program in California, did not respond immediately to a comment request.

Barsamian explained that when flights were grounded, jet fuel left over from the previous month could not be used in California and was repositioned to locations near the coasts in Houston and New Orleans.

Traders only use ships for storage as a last resort when land storage is unavailable or full. Keeping the vessels in service longer will delay their journeys and increase costs.

The jet fuel stocks in onshore tanks along the U.S. West Coast reached a record-breaking 12 million barrels during the week ending July 26. The CrowdStrike service was down since July 19.

Analysts at the ship tracking service Kpler reported that strong demand for this product led to a significant increase in imports from the West Coast. This has led to higher inventories than usual this year.

Kpler data shows that West Coast imports within the U.S. as well as from outside of it have averaged 135,000 barrels per day, which is about 25,000 barrels more than last year.

Last week, the West Coast jet fuel stockpiles were 11.8 million barrels, which is nearly 28% more than they were last year. (Reporting and editing by Aurora Ellis in New York, with Shariq Khan reporting from New York)

(source: Reuters)