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Cushing Inventories Hit December 2014 Low

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Cushing inventories 

Analysts estimate that Cushing inventories could have declined on March 2–9, 2018. The EIA is scheduled to release its crude oil inventories report on March 14, 2018.

A larger-than-expected drop in Cushing inventories is bullish for oil prices. April WTI crude oil futures contracts rose 3.2% to $62.04 per barrel on March 9, 2018. The iShares Global Energy ETF (IXC) and the iShares U.S. Energy ETF (IYE) rose 1.4% and 1.9%, respectively, on March 9, 2018. These funds have exposure to energy companies.

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EIA’s Cushing inventories

Cushing inventories declined by 605,000 barrels to 28.1 MMbbls (million barrels) on February 23–March 2, 2018. The inventories also declined by 36,222,000 barrels or 56.2% from a year ago.

TransCanada’s Keystone pipeline isn’t operating at maximum capacity due to a leak in 2017. However, a new pipeline is transporting more crude oil out of Cushing to refineries in Memphis and the Midwest. Less crude oil is coming in, but more oil is flowing out of Cushing, Oklahoma.

US crude oil inventories  

US oil inventories increased by 2.4 MMbbls to 425.9 MMbbls on February 23–March 2, 2018. However, the inventories dropped by 102.5 MMbbls or 19.4% from a year ago. The inventories also declined ~20.5% from the record high hit on March 31, 2017.  

Impact  

Cushing inventories declined ~59% from the record high hit on April 7, 2017. Since then, US oil prices have risen ~19%. The United States Oil ETF (USO) follows crude oil futures. USO has risen ~14% since April 7, 2017.

Cushing oil inventories were near the lowest level since December 12, 2014. An additional drop in Cushing inventories could benefit oil prices.

Next, we’ll discuss US crude oil rigs.

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