Oil Prices Climb As Cushing Oil Stocks Near Historic Lows
Oil Prices Climb As Cushing Oil Stocks Near Historic Lows | OilPrice.com
Oil Prices Climb As Cushing Oil Stocks Near Historic Lows
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The amount of crude oil in the Cushing, Oklahoma, hub has fallen to 22 million barrels, which is dangerously close to the minimum operating level, prompting worry about quality and the possibility of the stocks falling below the minimum level.
Oil inventories at Cushing have fallen from a two-year high of 43 million barrels in June to less than 22 million barrels, according to the American Petroleum Institute, as of last week.
The substantial decline was the result of higher demand from refiners, Reuters reported, and equally higher export demand.
"Cushing inventory levels that are flirting near historical lows are driving WTI prices higher in an already tight market," Vortexa analyst Rohit Rathod told Reuters.
The state of inventories at Cushing could become one more factor in support of higher oil prices, not least because at a level of 22 million barrels, the oil still available at Cushing becomes difficult to pump out. The storage hub has a capacity of 98 million barrels.
"If you let the crude (level) drop too low, the crude can get sludgy and you can't get it out. What does come out - you won't be able to use," Wood Mackenzie sales director Carl Larry told Reuters.
Stocks at Cushing may yet inch up during refinery maintenance season but not everyone agrees that it would be enough to make it usable again: refiners may opt for a shorter maintenance season amid still strong fuel demand.
The decline in refinery inputs during maintenance season is seen at 1.8 million barrels daily, compared with 1.5 million bpd this time last year.
If the inventory level does not rise meaningfully, however, this would have an additional bullish impact on prices, pushing WTI closer to $100 per barrel.
Nine years ago, inventories at Cushing fell below 20 million barrels but that was before the United States became a major oil and fuel exporter, so stocks were replenished quickly.
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By Charles Kennedy for Oilprice.com
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Related Knowledge Center: ENERGY BASICS: petroleum
While electric-powered vehicles may be the ride of the future, oil remains at least for now the dominant fuel for transportation around the world. And after a period of time at the end of the 20th century when oil was subject to wide fluctuations in price, new supplies in North America as a result of non-conventional recovery techniques have helped stabilize prices.