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Cushing Crude Oil Inventories May Push Crude Oil Prices Higher

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Cushing crude oil inventories 

The API (American Petroleum Institute) released its crude oil inventory report on August 16, 2016. It reported that Cushing crude oil inventories fell by 680,000 barrels from August 5–12, 2016. Data intelligence company Genscape reported that Cushing crude oil inventories fell by 350,000 barrels for the same period.

A decrease in crude oil inventories at Cushing supports crude oil prices. High crude oil prices positively impact the earnings of crude oil and gas producers such as Comstock Resources (CRK) and Goodrich Petroleum (GDP).

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EIA’s Cushing crude oil inventories 

The EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ended August 12, 2016, on August 17, 2016, at 10:30 AM EST.

For the week ended August 5, 2016, the EIA reported that Cushing crude oil inventories rose by 1.2 MMbbl (million barrels) to 65.3 MMbbl compared to the previous week. Cushing crude oil inventories were 14.4% more than they were in the corresponding period in 2015.

Cushing crude oil inventories hit 68.3 MMbbls, the highest point ever, in the week ended May 13, 2016. New pipelines that came online in 2014 and 2015 led to the rise in Cushing crude oil inventories. For more on US crude oil inventories, read Part 4 of this series.

Storage capacity 

Cushing, Oklahoma, is the delivery point for crude oil futures contracts trading on NYMEX (New York Mercantile Exchange). It’s also the largest crude oil storage hub in the United States. Cushing’s crude oil storage capacity is 73 MMbbl.

High Cushing crude oil inventories 

Cushing crude oil inventories have fallen by 4.3% from their peak levels. High Cushing crude oil inventories could pressure crude oil prices. Lower crude oil prices negatively impact the earnings of crude oil and gas producers such as Comstock Resources (CRK) and Goodrich Petroleum (GDP).

Volatility in crude oil prices impacts funds such as the Vanguard Energy ETF (VDE), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the Direxion Daily Energy Bull 3x ETF (ERX), and the iShares Global Energy (IXC).

Next, we’ll see why the US crude oil rig count rose for the seventh consecutive week.

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