In another sign that the world’s petroleum landscape has turned upside down, a Louisiana offshore facility built mainly to handle massive volumes of imported oil has begun selling its storage space to traders who have nowhere else to park a glut of U.S. crude.

U.S. daily oil production jumped 16 percent in 2014 to a record 8.7 million barrels a day, according to the federal Energy Information Administration. Despite slumping oil prices, the EIA expects production to grow by another 8.1 percent this year. Global production now exceeds consumption by about 1.5 million barrels a day.

Much of the U.S.-produced crude is piling up at Cushing, Oklahoma, the country’s major oil hub, said Brian Busch, director of oil markets and business development for data analysis firm Genscape. Storage levels at Cushing have been growing since November and will reach maximum capacity later this month or in early May.

“At that point, what happens? Either the crude goes into the refining complexes and it pushes imports offshore or you’ve got to find another home for storage,” Busch said. “And the most likely area for that additional storage is going to be the U.S. Gulf Coast. There’s more capacity down there than any place else, and LOOP right now probably has the cheapest storage.”

At Cushing, storage fees traditionally have been about 30 cents a barrel per month. But with storage space rapidly dwindling, some companies have demanded as much as $1 a barrel.

That’s about the same amount it costs to store crude aboard tanker ships, which some traders also have done while waiting for prices to rebound.

There have been few, if any, takers for the Cushing space at the higher price, Busch said.

Enter the Louisiana Offshore Oil Port and its cheaper alternative.

On Tuesday, LOOP and the CME Group, formerly the Chicago Mercantile Exchange and Chicago Board of Trade, auctioned 11.3 million barrels of LOOP’s monthly storage space. The highest price paid was 10 cents a barrel. Another auction is set for Tuesday, then more on a monthly basis.

“For us, it’s an innovative new product. It’s another service to our customers. We hope to attract new customers with it,” said Terry Coleman, vice president of business development at LOOP.

LOOP has storage space in eight salt dome caverns. The contracts allow buyers to store up to five grades of oil. The facility will auction 7 million barrels of storage space per month, or a total of 84 million barrels of storage for the year.

At LOOP, imports have fallen to roughly half the 1 million barrels a day the facility saw in 2008. The port is still handling about the same levels of oil, but most is now domestically produced from the Gulf of Mexico. Last year, for the first time in its 34-year history, LOOP received, stored and distributed more domestic crude than imports.

Gifford Briggs, vice president of the Louisiana Oil and Gas Association, said he’s not surprised LOOP is selling its extra storage capacity.

“If anyone has storage available, they’re probably looking for the opportunity to get that out there so that they can look for some revenue,” Briggs said.

David Dismukes, executive director of the LSU Center for Energy Studies, said the LOOP auctions indicate the market needs to find a better way to allocate storage resources. If storage prices get high enough, companies will even construct storage space, he said.

“We are long on supply and short on storage … and it’s going to continue to be that way,” he said.

It’s all part of the bizarre oilscape, where the glut of domestic oil has made storage space a valuable commodity.

Here’s why: Futures contracts for oil are selling for about $10 a barrel more than the current price. For example, the contract for oil to be delivered in April 2016 is nearly $58 a barrel. The U.S. benchmark price has been under $50.

So a trader who buys oil at $48 a barrel now, then pays 40 cents a month, or $4.80, to store it for a year, makes about a $5 profit on each barrel that he then sells at $58, Busch said.

“It’s a true arbitrage. That’s literally free money. Because there is no risk,” Busch said.

Some of Cushing’s storage facility operators looked at traders’ potential profits and thought they could get a piece of that money by raising storage prices.

The LOOP storage fee sounds like a great bargain, but there is some risk there, Busch said.

The contracts CME auctioned require the oil actually be delivered on a set delivery date. The oil can’t be traded out with offsetting contracts.

The problem for traders buying space at LOOP is that it’s not easy to send oil from Cushing to the offshore port, Busch said. The oil must travel by pipeline to a port, be loaded aboard oceangoing barges and shipped to LOOP, then unloaded and piped to the facility’s storage.

All of that costs money, Busch said. Then the trader has to find a buyer for the actual oil and sell it, and securing a profitable price is not a sure thing.

Follow Ted Griggs on Twitter, @tedgriggsbr.