Fundamentals 4: U.S Crude Oil Inventory


From our last release on OPEC Plus, we could see clearly how the global oil market was already battling with too much supply, posing huge concerns for the OPEC cartel. In this article, we switch gears a little and focus on the U.S crude oil inventories. For a fact, in the last few years the business of storing crude oil has soared!

Crude inventory provides the link between oil supply and oil demand, and of course influences oil prices. When petroleum stock pile surges, the price of crude oil falls. And the reverse is true when stock pile dips. For example, after a booming U.S oil industry in 2015 led to huge amounts of oil production that drove down global crude oil prices, the U.S energy industry responded by storing produced crude oil instead of selling at discount rates (among other market supply constraints) and thus created an unprecedented situation in tank farms such as in Oklahoma where the Cushing oil hub was reported to have almost filled up! This then led to a glut of oil and caused further decline in prices as oil traders also began betting on buying cheap oil, storing it and selling later when price increase would be high.

Fig1A: U.S tank farm storage 2011 to 2019
Source: U.S Energy Information Administration, 2019

U.S Crude oil storage utilization rates

Utilization rate of commercial crude oil storage capacity has been between 55% – 75% in the last eight (8) years, during which its highest levels were between 2015 and 2017 (fig 1B). In 2019, it stood between 55% – 59%. According to the EIA, these estimates include commercial stocks in transit by rail and pipeline, and the capacity of tankers and barges is assumed to be 100%.
The EIA also releases its reports twice in a year (March & September). It can be observed from the graphs (fig1 A & B) that in the past 8 years, tank farm storage and utilization rates have consistently been lower in September than in March.

Fig1B: U.S crude oil storage utilization rates 2011 to 2019
Source: U.S Energy Information Administration, 2019

Petroleum product Inventory and crude oil price

Petroleum product inventory also influences oil price. Such inventories measure the change in the number of barrels of refined products held in stock by commercial firms during a reported period. They affect product price (much like oil stocks affect oil price), and consequently the demand for the refined product. Product demand on the other hand influences refinery demand, which thus affects crude oil demand and then crude oil price. (Fig 2 shows gasoline inventory between 1945 and 2018)

Fig2: U.S stocks of gasoline 1945 to 2018
Source: U.S Energy Information Administration, 2019

U.S Crude oil & petroleum product inventory (excluding the Strategic Petroleum Reserves)

Having already established how refined products inventories also influence crude oil prices, Fig3 shows data for commercial stocks of U.S crude oil and petroleum products (combined). The data includes tank farm storage, rail and pipeline stock, as well as underground and tanker inventories.

For many decades, commercial inventories averaged around 1,000,000 thousand (1 billion) barrels. However, this has changed significantly in the last five years with the United States oil production reaching record highs.

Fig3: U.S commercial crude oil stocks (excluding SPR) 1990 to 2019
Source: U.S Energy Information Administration, 2019

Strategic petroleum reserves

The United States strategic petroleum reserve (SPR) is the world’s largest supply of emergency crude oil. It was created in response to the oil supply interruptions of 1973. The purpose of the SPR is to ensure physical security of crude oil supply. Fig 3 shows the historical crude oil stock in the SPR.

Fig3: U.S strategic petroleum reserve inventory 1977 to 2019
Source: U.S Energy Information Administration, 2020

The SPR is maintained by the department of Energy and currently has about 645 million barrels of crude oil stored in salt domes along the Gulf Coast with a capacity to hold up to 727 million barrels. Ideally, the reserve cannot be tapped unless there is an emergency, and in the event of an emergency, the reserve can supply up to 4.4 million barrels per day for 90 days.

In conclusion: Crude oil inventory influences oil price and is gaining even more awareness as U.S production continues to grow. Speculators therefore pay close attention to crude oil inventories, and even more so, the inventories at Cushing which is the delivery hub for U.S. crude oil futures!


CBS: “What is Strategic Petroleum Reserve”, September 16, 2019,

EIA: “Weekly U.S. Ending Stocks excluding SPR of Crude Oil and Petroleum Products”, January 08, 2019,

Investopedia: “The Effect of Crude Inventories on the Oil Economy”, May 05, 2019,


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