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Crude Oil Market: Is OPEC Its Own Worst Enemy?

PART:
1 2 3 4 5
Part 4
Crude Oil Market: Is OPEC Its Own Worst Enemy? PART 4 OF 5

Why Cushing Inventories Hit a New Low

Cushing inventories  

A preliminary survey estimates that inventories at Cushing could have fallen between July 14 and July 21, 2017. Inventories are at their lowest level since November 13, 2015. An expectation of a fall in Cushing inventories has a positive impact on crude oil (RYE)(VDE)(SCO) prices.

The roller coaster ride in crude oil (USO)(UCO) prices impact oil and gas producers like Warren Resources (WRES), Exxon Mobil (XOM), Chesapeake Energy (CHK), Matador Resources (MTDR), and SM Energy (SM).

Why Cushing Inventories Hit a New Low

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EIA’s crude oil inventory report  

The EIA (U.S. Energy Information Administration) is scheduled to release its weekly crude oil inventory report on Wednesday, July 26, 2017, at 10:30 AM EST.

In its previous report, Cushing crude oil inventories fell by 23,000 barrels to 57.5 MMbbls (million barrels). Cushing inventories are down 0.1% week-over-week and 11.7% year-over-year.

US crude oil inventories 

US crude oil inventories had fallen by 4.7 MMbbls (million barrels) to 490.6 MMbbls from July 7 to July 14, 2017. Inventories are at their lowest level since January 27, 2017.

Cushing inventories 

Cushing is the largest crude oil storage hub in the United States. It’s also the delivery point for the West Texas Intermediate crude oil futures traded on NYMEX. Cushing’s crude oil storage capacity is 73 MMbbls. The current inventories are 21.2% lower than Cushing’s capacity.

Impact of falling Cushing inventories 

Cushing inventories have fallen for the thirteenth time in the last 15 weeks. Inventories have also fallen ~18.1% from their peak. Summer’s peak driving season could drain US and Cushing crude oil inventories, which would benefit US crude oil (XLE)(XOP)(PXI) prices.

Next, we’ll analyze US crude oil rig counts last week.

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