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Rise in Crude Oil Inventories Could Pressure Oil Prices

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Nov. 20 2020, Updated 11:41 a.m. ET

Cushing crude oil inventories   

Market surveys estimate that Cushing crude oil inventories rose from February 3–10, 2017. A rise in crude oil inventories at Cushing could pressure US crude oil (IEZ) (ERY) (ERX) prices. For more on crude oil prices, read Part 1 and Part 4 of this series.

Lower crude oil prices will have a negative impact on crude oil producers’ earnings such as QEP Resources (QEP), Synergy Resources (SYRG), Marathon Oil (MRO), and Continental Resources (CLR).

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EIA’s crude oil inventory report  

On February 15, 2017, at 10:30 AM EST, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending February 10, 2017.

For the week ending February 3, 2017, the EIA reported that Cushing crude oil inventories rose by 1.1 MMbbls (million barrels) to 65.2 MMbbls—compared to the previous week. Inventories rose 1.8% week-over-week and 1% year-over-year.

Cushing crude oil inventories hit 68.3 MMbbls, the highest point ever, in the week ending May 13, 2016. New pipelines that came online in 2014 and 2015 led to the rise in Cushing crude oil inventories. Read Are US Crude Oil Inventories Approaching an All-Time High? for more on US crude oil inventories. 

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Cushing’s storage capacity   

Cushing, Oklahoma, is the delivery point for crude oil futures contracts trading on NYMEX. It’s also the largest crude oil storage hub in the US. Cushing’s crude oil storage capacity is 73 MMbbls.

Impact   

As you can see in the above graph, crude oil (VDE) (FENY) (SCO) prices and inventories have an inverse relationship. Cushing crude oil inventories have risen ~6.4 MMbbls, or ~11%, in the last 11 weeks. Near-record Cushing crude oil inventories could pressure crude oil prices in 2017.

Next, we’ll analyze the US crude oil rig count last week.

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