uploads/2017/03/cush-4.png

High Cushing Crude Oil Inventories: More Pain for Oil Prices

By

Updated

Cushing crude oil inventories 

Market surveys estimate that Cushing crude oil inventories rose from March 17–24, 2017. A rise in crude oil inventories at Cushing could pressure US crude oil (XLE) (UCO) (XES) (PXI) prices.

Lower crude oil prices will have a negative impact on crude oil producers’ earnings such as Marathon Oil (MRO), Northern Oil & Gas (NOG), Chesapeake Energy (CHK), and Triangle Petroleum (TPLM).

EIA’s crude oil inventory report  

On March 29, 2017, at 10:30 AM EST, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending March 24, 2017.

For the week ending March 17, 2017, the EIA reported that Cushing crude oil inventories had risen by 1.4 MMbbls (million barrels) to 67.9 MMbbls—compared to the previous week. Inventories were up 2.1% week-over-week and 2.6% year-over-year.

Cushing crude oil inventories hit 68.3 MMbbls, the highest point ever, in the week ending on May 13, 2016. New pipelines that came online in 2014 and 2015 led to the rise in Cushing crude oil inventories. 

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 (FENY) (VDE) (USL) prices and inventories have an inverse relationship. Cushing crude oil inventories have risen by ~9.2 MMbbls, or ~15.1%, in the last 17 weeks—0.5% below their all-time highs. Near-record Cushing crude oil inventories could pressure crude oil prices to fresh lows.

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

More From Market Realist