Cushing crude oil inventory

The latest data from Genscape suggest that the crude oil inventory at Cushing, Oklahoma, has hit 90% of storage capacity. The rising crude oil inventory at Cushing will put pressure on crude oil prices. Cushing, Oklahoma, is the largest storage hub in the United States. The EIA (U.S. Energy Information Administration) reported that weekly crude oil inventory rose by 0.423 MMbbls (million barrels) to 59 MMbbls for the week ending December 4, 2015. Cushing crude oil inventory is more than double the inventory in 2014.

Cushing Crude Oil Inventory Hits 90% of Storage Capacity

Gulf Coast and Cushing inventories

The EIA reported that the combined crude oil inventories at Cushing, Oklahoma, and the US Gulf Coast hit a record high of 309.4 MMbbls for the week ending November 27, 2015. Storage at these sites is at 70% of combined storage capacity, which is lower than the record of 72% set in April 2015. The Gulf coast and Cushing have 55% and 13%, respectively, of the total US storage capacity. Thus, about 67% of US storage is above 70% of storage capacity. These storage sites’ capacities have been increased since 2011 due to new pipelines coming online.

Meanwhile, the nationwide crude oil inventory fell by 3.6 MMbbls to 485.9 MMbbls for the week ending December 4, 2015. The current crude oil inventory is 27% more than last year’s level. Inventory is also at an 80-year high for this time of year. Record US inventory and fast-filling storage sites should continue to put pressure on crude oil prices.

Lower crude oil prices impact the margins of crude oil producers like Marathon Oil Corporation (MRO), Murphy Oil Corporation (MUR), Pioneer Natural Resources (PXD), and EOG Resources (EOG). In contrast, lower crude oil prices benefit US oil refiners.

The uncertainty in the oil market also affects ETFs like the Vanguard Energy ETF (VDE), the iShares US Oil Equipment & Services ETF (IEZ), and the First Trust Energy AlphaDEX Fund (FXN).

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