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Cushing Oil Stocks Are Weighing on Crude Oil Prices

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Crude oil inventory

The latest consensus suggests that crude oil stockpiles rose by 1.7 MMbbls (million barrels) for the week ending August 11, 2015, at Cushing, Oklahoma. This is the highest rise in the crude oil inventory at Cushing since March 2015. Cushing, Oklahoma, is the largest crude oil storage hub in the US. It’s also the delivery point for NYMEX crude futures.

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EIA estimates

On Wednesday, August 12, 2015, the EIA (U.S. Energy Information Administration) reported that the crude oil inventories at Cushing, Oklahoma, fell by 51, 000 barrels to 57.113 MMbbls for the week ending August 7, 2015—compared to the previous week. Last year, the Cushing inventories were at 18.4 MMbbls over the same period. Crude oil inventories fell for the third straight week at Cushing.

However, recent estimates suggest a rise in the crude oil inventory as stated above. The rise in the crude oil inventory implies that crude oil supplies are rising or demand is falling. As a result, they will put downward pressure on crude oil prices.

The possible factors for the rise in inventories could be a rise in US production, a rise in US imports, or a fall in US refinery demand.

Like the Cushing crude oil stocks, the nationwide crude oil inventories fell by 1.7 MMbbls to 453.6 MMbbls for the week ending August 7, 2015. The current crude oil inventories are 23% more than the level of 367.01 MMbbls last year. They’re also near an 80-year high during this period of the year. The record inventories will continue to put pressure on crude oil prices.

The recent fall in crude oil prices impacts upstream players like Apache (APA), ExxonMobil (XOM), and ConocoPhillips (COP). These companies account for 21.24% of the Energy Select Sector SPDR ETF (XLE). ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) are also affected by falling crude oil prices.

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