The WPSR for the week ended September 15, released Wednesday, showed a fall of 2.1 MMbbl in commercial inventories. This drop was mostly due to a fall of 3 MMb/d in net imports, as imports dropped by 1 MMb/d and exports soared by 2 MMb/d. The steepest drop was at Cushing, OK, where stocks fell by 2.1 MMbbl to just 22.9 MMbbl; but when you take into account the 2.1 MMbbl in pipeline fill and another roughly 10 MMbbl that has to stay in tanks so the floating tops don’t hit the bottom, we actually have close to just 10 MMbbl of transportable crude. This isn’t a cause for concern just now but is something worth paying attention to over the next few weeks.
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- Analyst Insight
Cushing Crude Oil Inventories Fall for 12th Time in 13 Weeks
U.S. commercial crude inventories fell by 2.2 MMbbl in the week ended September 22, with continued declines at the key storage hub of Cushing, OK. Cushing inventories have fallen in 12 of the 13 last weeks.
- Blog
One Way Out - Yesterday's Crude Price Meltdown, Futures Contract Expiration and Crude Storage
We have now entered the crude oil twilight zone. Never before has crude traded below zero, much less at the absurd level of negative $37.63/bbl. There is no doubt that demand for crude and motor gasoline are far below crude production volumes, leaving the market vastly oversupplied. But could it really be this bad? When you are talking about the market for physical barrels, the answer is “no”. It is bad. Really bad. But what happened yesterday had more to do with the mechanics of futures contracts and how they transition from month to month, than a complete mega-meltdown in physical barrels. That is not to say that negative prices for physical barrels are not already a fact of life in some locations. But negative $37.63/bbl? Something else must be going on. So, to put yesterday’s bizarre market action in perspective, we need to get into a few details on futures contract mechanics, and then look forward to what may be coming over the next few weeks. In today’s blog, we discuss the factors that are driving such extraordinary crude market developments.
- Blog
Tops Drop - Prices Popping, Crude Oil Tank Tops Keep Dropping Down in Cushing
Russia’s war on Ukraine turbocharged global crude oil prices and spurred price volatility the likes of which we haven’t seen since COVID hit two years ago. The price of WTI at the Cushing hub in Oklahoma — the delivery point for CME/NYMEX futures contracts — has gone nuts, and the forward curve is indicating the steepest backwardation ever. In other words, the market is telling traders in all-caps, “SELL, SELL, SELL! Sell any crude you can get your hands on. It’s going to be worth far less in the future.” So anyone with barrels in storage there for non-operational reasons is pulling them out, and fast! In today’s RBN blog, we look at the recent spike in global crude oil prices and what it means for inventories at the U.S.’s most liquid oil hub.
