Why are crude oil inventories so high?

[dan_s]

Refineries are the main source of crude demand. Refinery input levels affect inventory draws and builds. So, refining throughputs affect inventory levels not only for crude oil, but also for refined products—like gasoline and distillates.

http://finance.yahoo.com/news/refinery- ... 54443.html

[Gnxl1]

Hey Dan, I have read oil is being stored in Cushing to capture the WTI/Brent spread and contango, $11 spread and about $7 contango (1year out). To capture the WTI/Brent spread I'd guess somehow you swap your futures WTI sale with a Brent buy, so one less VLCC is routed to LOOP one year out, on 2mm bbls.

bill

[dan_s]

Yes, more and more individuals and hedges funds are buying physical oil and storing it at Cushing. Idea (of course) is to buy low and sell high. Because of the huge spread between the front month NYMEX contract and the contracts a year out, investor can lock in a nice gain. There is a fee to store oil at Cushing.