Crude oil storage utilization in Cushing hits 90%
In the previous part of this series, we covered how crude oil inventory data could affect crude oil prices. In the meantime, US crude oil inventories are at a 34-year high. Because of the record inventory, the crude oil is being stored both on land and in oil tankers in the sea. The latest data suggest that crude oil storage facilities in Cushing, Oklahoma, are almost at 90% of their capacity. Read Why Did Cushing Crude Oil Stocks Hit a New Record? for more on crude oil inventories. Secondly, long-term oversupply concerns have led to the rise in storage capacities on the Gulf Coast and at Cushing.
US crude oil storage utilization at more than 60% of capacity
The U.S. Energy Information Administration and Genscape, a market intelligence company, state that US crude oil storage utilization is at just over 60% of total storage capacity. The rising US crude oil inventory, the return of refineries from maintenance season, and US oil imports will increase crude oil storage costs for oil producers who are willing to store crude oil and sell it at a higher price in the future. Read how oil producers are selling their forward contracts in the next part of this series.
Record US inventories benefit oil storage and transportation companies like Williams Companies (WMB), DCP Midstream Partners (DPM), Enterprise Products Partners (EPD), and Spectra Energy (SE). In contrast, they negatively affect oil producers like Statoil (STO), CONSOL Energy (CNX), and Marathon Oil (MRO).
The record crude oil and refined products inventories could put pressure on crude oil prices and motivate US producers to export crude oil. However, the current WTI-Brent spread makes US crude oil exports unviable.
ETFs and ETNs like the United States Oil Fund (USO), the iShares U.S. Oil Equipment & Services ETF (IEZ), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the Vanguard Energy ETF (VDE) are influenced by the ups and downs in the oil and gas market.