MUMBAI: Crude oil contracts on Multi Commodity Exchange of India tanked over 25% today as traders ran out of space to store excess oil in the market. Global demand for the commodity has fallen nearly 30% due to the coronavirus pandemic.

News reports claimed that in India, tankers onshore were nearly full as refineries run out of space to store oil. The country is currently under lockdown till May 3, which has wiped out demand for fuel.

Oil tankers have been stacking up near the Strait of Hormuz, one of the most important checkpoints for crude oil, as demand for the commodity has fallen nearly 30% due to the COVID-19 pandemic. Global oil storages onshore have been filling up rapidly as well, and are expected to reach their peak in the near future.

In the US, crude oil inventories for the week ended Apr 17 rose to 518.6 mln barrel, near the record high of 535 mln bbl set in 2017. Stocks at Cushing in Oklahoma, the delivery point for West Texas Intermediate crude oil, are also nearly full, leaving traders no space to store additional oil.

At 1819 IST, the WTI June contract on New York Mercantile Exchange was at $12.91 per bbl, down 24%, and the July Bent contract on Intercontinental Exchange was at $23.31 a bbl, down 6.1%. The May contract on MCX was at 1,009 rupees per bbl, down 25.3%.

"On the supply side, leading OPEC (Organization of the Petroleum Exporting Countries) countries such as Saudi Arabia, Kuwait, Nigeria and Algeria have brought forward the agreed production cuts and will begin implementing them before May 1," Commerzbank AG said in a report. OPEC and its allies had agreed to reduce production of oil by 9.7 mln bbl per day for May and June.

The number of speculative net long positions in West Texas Intermediate crude contracts on the NYMEX rose in the week ended Tuesday by 76,511 contracts to 587,180, according to reports citing US Commodity Futures Trading Commission data.

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