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Will Cushing Crude Oil Inventories Fall for 5th Consecutive Week?

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Cushing crude oil inventories  

Market surveys estimate that Cushing crude oil inventories fell between May 5 and May 12, 2017. A fall in crude oil inventories at Cushing could support US crude oil (USO) (UCO) (RYE) prices. Higher crude oil prices could have a positive impact on the earnings of crude oil producers like Apache (APA), Warren Resources (WRES), and QEP Resources (QEP).

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EIA’s crude oil inventory report  

On May 17, 2017, at 10:30 AM EST, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending May 12, 2017.

For the week ending May 5, 2017, the EIA reported that Cushing crude oil inventories fell by 0.4 MMbbls (million barrels) to 66.2 MMbbls in the previous week. Inventories are down 0.6% week-over-week and 2.2% year-over-year. Cushing crude oil inventories fell for the fourth consecutive week.

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) (DIG) (ERY) prices and inventories have an inverse relationship. Cushing crude oil inventories hit the highest level of 69.4 MMbbls in the week ending April 7, 2017. Inventories are down 5% from their peak. The fall in Cushing crude oil inventories could support crude oil prices.

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

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