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Cushing Stocks and Crude Oil Prices Move in the Same Direction

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Cushing stock estimates

The EIA (U.S. Energy Information Administration) estimated that the US crude oil stockpile at Cushing, Oklahoma, rose by 326,000 barrels to 57.439 MMbbls (million barrels) for the week ending August 14, 2015. In contrast, Cushing stockpiles fell by 51,000 barrels to 57.113 MMbbls for the week ending August 7, 2015.

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Impact

During the same period in 2014, the Cushing stockpile was at 20.55 MMbbls. The commercial crude oil inventories at Cushing rose for the first time in the last four weeks for the week ending August 14, 2015.

Cushing, Oklahoma, is the largest crude oil storage hub in the US. It’s also the delivery point for crude oil futures contracts trading in NYMEX.

The rise or fall in the crude oil inventory influences crude oil prices. The rise in the crude oil inventory implies that supplies are rising or demand is falling. It would have a negative influence on crude oil prices.

The EIA reported that the nationwide crude oil stocks rose by 2.6 MMbbls to 456.2 MMbbls for the week ending August 14, 2015. These stocks are 100 MMbbls more than the five-year seasonal average.

The current crude oil stocks are 25% more than the levels of 362.5 MMbbls last year. They’re also near an 80-year high during this period of the year. This could add pressure to crude oil prices. However, prices rallied in yesterday’s trade. These record inventories and record supplies will continue to put downward pressure on crude oil prices. So, this rally could be short-lived.

The catastrophic fall in crude oil prices over the past few months has erased the market cap of many US oil producers. The upstream companies have lost more compared to midstream or downstream players. Upstream players like ConocoPhillips (COP), Murphy Oil (MUR), and Marathon Oil (MRO) have lost more than 15% in the last month. They account for 5.80% of the Energy Select Sector SPDR ETF (XLE). These companies also have a crude oil production mix that’s more than 49% of their total production.

Falling crude oil prices also affect oil and gas ETFs like XLE and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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