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Why Did Cushing Crude Oil Stocks Hit a New Record?

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Dec. 4 2020, Updated 10:53 a.m. ET

API Cushing crude oil stocks 

The American Petroleum Institute reported that Cushing crude oil stocks fell by 0.18 MMbbls (million barrels) for the week ending February 12, 2016. Market intelligence company Genscape reported that Cushing crude oil stocks rose by 705,000 barrels for the same period. Cushing, Oklahoma, is the largest storage hub in the US. It’s also the delivery point for crude oil futures contracts trading in NYMEX.

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Cushing crude oil stocks

The U.S. Energy Information Administration reported that Cushing crude oil stocks rose by 36,000 barrels to 65 MMbbls for the week ending February 12, 2016. Meanwhile, the nationwide crude oil inventory rose by 2.1 MMbbls to 504.1 MMbbls for the same period. To learn more, read Crude Oil Inventory Report Is a Bearish Catalyst for Oil Prices. For more on refined products, read Rising US Gas Inventories Pressure Crude Refiners, Oil Prices and US Distillates Add Fuel to the Fire in an Oversupplied Oil Market.

Why did Cushing crude oil stocks rise?

New pipelines coming online in 2015 led to a record rise in crude oil stocks. Long-term oversupply concerns led to the rise in Cushing storage capacities. The pipeline infrastructure in this area is the Keystone pipeline. It’s owned by TransCanada (TRP). As a result, Cushing crude oil stocks hit a new record. The current Cushing stocks are the highest ever. They’re also 50% more than the levels last year. The rise in Cushing crude oil stocks will continue to support crude oil exports. However, the current WTI-Brent spread makes US crude oil exports unviable.

Rising crude oil stocks support oil and gas storage and transportation companies such as Williams Companies (WMB), DCP Midstream (DPM), Enterprise Products (EPD), Spectra Energy (SE), and Kinder Morgan (KMI). Depressed oil prices also benefit oil refiners like Alon USA Energy (ALJ), HollyFrontier (HFC), and Sunoco (SUN).

Volatility in the oil and gas market also impacts ETFs and ETNs such as the Vanguard Energy ETF (VDE), the VelocityShares 3x Long Crude Oil ETN (UWTI), the Direxion Daily Energy Bull 3X ETF (ERX), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

In the next part of the series, we’ll discuss the U.S. Commodity Futures Trading Commission’s report to understand how smart traders play the oil market.

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