U.S. oil companies have started pulling their crude oil back from government storage tanks, suggesting that the glut that forced them to stash it there in the first place is now easing.

Companies have taken out some 2.2 million barrels of crude since the start of the month, Reuters reports, citing government figures. That’s out of some 23 million barrels that oil producers had to store at government tanks when they ran out of storage space after the slump in demand.

Storage space was leased in April after oil prices tanked below zero for the first time in history as traders rushed to offload their positions before the contract expired. Despite the brevity of this particular mini-crisis, fundamentals remained difficult as companies were just beginning to cut production, which left them saddled with a lot of oil they could neither sell nor store.

President Trump tried to help by ordering the Energy Department to buy some 77 million barrels from the struggling industry. That order, however, was never fulfilled. Renting out storage space was the only viable alternative.

At the time, there were worries that this additional flow of oil into the Strategic Petroleum Reserve would push its occupancy rate too high, leaving nothing available and sending oil prices downward again. While this did not happen thanks to the production cuts that U.S. producers made, prices remained depressed for quite a while because of these storage space availability concerns.

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This makes the news that Exxon, Chevron, and the other six companies that rented SPR storage space are taking it back all the better. However, those watching the Energy Information Administration’s weekly inventory report might want to bear it in mind in case one of the next reports does not feature a hefty drawdown.

By Irina Slav for Oilprice.com

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