According to the US Energy Information Admininstration (EIA) , crude oil inventories at Cushing, Oklahoma, declined 12 million bbls (29%) over the past seven weeks.
On 14th March 2014 Cushing inventories were 30 million bbls, 19 million bbls lower than a year ago and the lowest level since early 2012.
The EIA has suggested that the recent decline has resulted from:
- The startup of the TransCanada Cushing Marketlink pipeline, which is now moving crude from Cushing to the US Gulf Coast.
- Sustained high crude runs at refineries in PADD 2 and Padd 3 (Midwest and Gulf Coast respectively).
- Expanded pipeline infrastructure and railroad shipments that have made it possible for crude to bypass Cushing storage and move directly to refining centres in PADDs 1 and 5 ( East Coast and West Coast respectively).
PADD 2 refinery utilisation averaged 92% in 2014 through to 14th March, up 89% over the same period a year ago. Refinery utilisation in PADD 3 was up 4%. Refinery crude inputs in PADDs 2 and 3 for year to date 2014 averaged 780 000 bpd higher than in 2013.
Steep backwardation (when near term prices are higher than longer term prices) also incentivized selling crude out of inventory. Since early January, the West Texas Intermediate (WTI) 1st - 13th price spread increased from less than US$ 6/bbl to US$ 10/bbl on 19th March. With MarketLink operational, more crude can flow out of inventory at Cushing to refineries in the Gulf Coast in response to market price signals.
However, despite the decline stocks remain significantly higher than 2005 – 2008 levels. Large volumes of crude oil produced from tight oil formations in the Midcontinent have been delivered to Cushing storage over the past few years. According to the EIA, today’s Cushing inventory levels have fallen to reflect current market conditions and although reduced, remain consistent with crude supply requirements to meet regional refinery demand.
Meanwhile, propane stocks increased by 0.2 million bbls, to end last week at 26.2 million bbls, 15.5 million bbls (37.2%) lower than a year ago. Gulf Coast stocks recorded the only gain, with 0.8 million bbls of new inventories. Midwest inventories decreased by 0.4 million bbls, East Coast by 0.1 million bbls. Rocky Mountain and West Coast stocks were down only slightly.
Propylene non-fuel use inventories accounted for 12.9% of total propane inventories.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/20032014/cushing_inventories_down290/