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Cushing Inventories: Bears Could Outcast the Bulls

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Cushing inventories  

Wall Street analysts estimate that Cushing’s crude oil inventories would have risen on October 27–November 3, 2017. It’s the biggest crude oil storage facility in the US. The inventories are at the highest level since May 2017. Any rise in the inventories at Cushing, Oklahoma, is negative for oil (DTO) (DBO) (SCO) prices. Lower oil prices impact oil producers (IXC) (FXN) like Marathon Oil (MRO), Murphy Oil (MUR), ExxonMobil (XOM), BP (BP), and Goodrich Petroleum (GDP).

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EIA’s Cushing inventories

The EIA (U.S. Energy Information Administration) reported that Cushing’s crude oil inventories rose by ~100,000 barrels to 63.8 MMbbls (million barrels) on October 20–October 27, 2017. The inventories rose 0.2% week-over-week and by ~5,300,000 barrels or 9.1% YoY (year-over-year).

EIA’s US crude oil inventories  

According to the EIA, US crude oil inventories fell by 2,435,000 barrels to 454.9 MMbbls on October 20–27, 2017. US crude oil inventories were near a two-year low. The inventories fell 0.5% week-over-week and by 27.6 MMbbls or 5.7% YoY.

Impact of US and Cushing inventories 

Cushing crude oil inventories rose by ~7,300,000 barrels or 12.9% in the last ten weeks. Similarly, nationwide crude oil inventories were 15% higher than the five-year average for the week ending October 27, 2017.

High nationwide and Cushing inventories could cap the upside for crude oil (UCO) (USL) prices. Volatility in oil prices impacts energy producers (FXN) (FENY) like Goodrich Petroleum and SM Energy.

In the next part, we’ll discuss how the US oil rig count impacts oil prices.

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