Oil and Gas

Oil storage in US close to running out: Pro

Out of oil storage in 6-8 weeks: Pro
Out of oil storage in 6-8 weeks: Pro

U.S. crude posted its first monthly gain since June on Friday, but one expert warned that storage in the United States is filling up quickly, and that could send oil lower.

"We are really close," said Bank of America Merrill Lynch's Francisco Blanch, noting that storage could run out by the end of March or early April.

Blanch, the firm's head of global commodities and derivatives, told CNBC's "Power Lunch" that means the only option for oil producers will be to sell and therefore prices can't hold up.

"For WTI, we see those pressures being very pronounced over the next few weeks," he said.

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Oil tanks and pump jacks are seen in an oil field near Bakersfield, Calif.
Lucy Nicholson | Reuters

Oil inventories in the U.S. were up 8.4 million barrels last week, according to government data.

On the other hand, the international market has held up a little better, Blanch said.

"We've seen somewhat less oil being produced out of OPEC for unexpected reasons, but the market is still oversupplied."

Those reasons include the domestic turmoil in Libya causing it to produce very little oil and disruptions in Iraq because of weather, he noted.

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While U.S. crude snapped its seven-month losing streak Friday, it is still down 50 percent in the past year.

U.S. April crude settled up $1.59, or 3.3 percent, at $49.76 a barrel on Friday. The contract posted a 3 percent gain for the month of February.

was up $3.90 at $62.40 a barrel, on pace to post a 16 percent monthly gain, the first monthly rise since June.

—Reuters contributed to this report.