A stunning reversal. It’s the picture painted about the stockpile of crude oil at the Cushing oil hub in northern Oklahoma.
As OK Energy Today reported, the Cushing hub held 31.2 million barrels as of Oct. 15, a 2.3% drop from the previous week. A year ago, Cushing had 60.4 million barrels in storage meaning the most recent amount is 48.3% lower. But the crude amount held in the massive tank farm was also more than 48% lower than a year earlier.
One expert suggests it should come as no surprise.
DTN market analyst Troy Vincent warned of the Cushing Hub’s low inventory a month ago. Now it is playing out as predicted.
“The reason Cushing has been drawing at this pace is due to both the shut-in offshore Mars crude production resulting from Hurricane Ida and the weakness in Canadian crude imports,” he explained last month, pointing to a sharp narrowing of the WTI Houston Premium to WTI Cushing and the WFCS Discount to WTI grow to its largest since early January 2021.
“This portends rising Canadian crude imports in the weeks ahead and a slowing pull on Cushing inventories to Houston which should begin to slow the draws to Cushing stocks as we work through Q4. Shell’s announcement today that the WD143 transfer platform will be coming back online months ahead of schedule also signals that production and supply to gulf coast refiners from the Mars field will resume faster than expected and should also limit further Cushing draws as we work through November.”
Bloomberg reports the stockpiles are “quickly approaching critically low levels” and the last time they were that low, crude carried a price of more than $100 a barrel.
Click here for Bloomberg.