Tag: Storage

The Incoming Glut: Excessive Levels of Heavy Crude Supply in a Saturated Market

The worst of the coronavirus induced oil crash seems to have bottomed out as storage inventories saw fairly dramatic drawdowns in the final weeks of May, a reversal of events from the past several months. Such relief may be all but eliminated in the ensuing week as an influx of nearly fifty million barrels of foreign crude oil is about to reach the U.S. Gulf and West coasts. The volume of incoming crude may offset most of the production cuts generated by domestic operators and extend low oil prices until the inventories can be worked back down.

Crude Utilization and Commodity Pricing: The Relationship between Storage at the Cushing Hub and its Influence on WTI Pricing

There is a strong inverse relationship between crude storage levels seen at the Cushing, Oklahoma facility and WTI futures price. This relationship exists even though the storage facility only holds a percentage of total domestic crude inventory. In fact, data suggests that in order for crude prices to stabilize above $55 per barrel, inventory in Cushing will need to drop below 47.5 million barrels, or about 62% storage utilization at the facility.