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Why Cushing Crude Oil Inventories Could Pressure Crude Prices

Gordon Kristopher

Will >$50 Crude Oil Prices Extend the Oversupplied Market?

(Continued from Prior Part)

API Cushing crude oil inventories

The API (American Petroleum Institute) reported that Cushing crude oil inventories fell by 0.189 MMbbls (million barrels) in the week ending May 20 from the previous week. Market surveys suggest that Cushing crude oil inventories might have risen for the week ending May 27. This increase could pressure crude oil prices.

EIA’s Cushing crude oil inventories

The EIA (U.S. Energy Information Administration) reported that Cushing crude oil inventories fell by 0.7 MMbbls to 67.6 MMbbls for the week ending May 20 from the previous week. Total Cushing crude oil inventories hit 68.3 MMbbls for the week ending May 13—the highest level for Cushing crude oil inventories ever! For more on US crude oil inventories, read Why US Crude Oil Inventories Saw Largest Decline in 7 Weeks. You can also check out the previous part of this series for the latest WTI crude oil prices.

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Cushing crude oil inventory storage capacity

Cushing, Oklahoma, is largest crude oil storage hub in the United States. It’s also the delivery point for crude oil futures contracts trading on the NYMEX (New York Mercantile Exchange). Cushing’s crude oil storage capacity is 73 MMbbls. New pipelines coming online in 2014 and 2015 led to the rise in Cushing crude oil inventories.

Impact of near record Cushing crude oil inventories

Total Cushing crude oil inventories are 11.36% higher than they were this time last year. Near-record Cushing crude oil inventories could also pressure crude oil prices. Lower crude oil prices affect the margins of oil producers like Carrizo Oil & Gas (CRZO), QEP Resources (QEP), and Goodrich Petroleum (GDP).

ETFs like the ProShares Ultra Oil & Gas (DIG), the Vanguard Energy ETF (VDE), and the iShares US Oil Equipment & Services (IEZ) are also affected by uncertainty in the crude oil market.

Next, we’ll take a look at the latest update on the US crude oil rig count.

Continue to Next Part

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