Oil Storage: "Fear" of reality

[dan_s]

Per Raymond James 3/16 report:
Earlier this month, the EIA reported that U.S. crude storage capacity was only 60% full, not 80+% – so what gives?
The difference is that the storage capacity figure of 521million barrels only encompasses tank farms and refineries, whereas the reported weekly storage figure of 449 million barrels not only tracks volumes in tanks farms and refineries but also includes oil traveling by pipeline and even field-level storage (called “lease stocks”). This amounts to a big difference. Specifically, non-tank farm/refinery inventory is estimated to be as high as 120 million barrels, meaning that the true levels of oil storage sitting in tank farms and refineries is likely closer to 330 million.
Comparing this new figure to the same tank farm/refinery storage capacity would imply running room of over 25 weeks until we run out of storage (521 - 330 = 191 divided by 7 = 27 weeks). That means, at the current pace of inventory builds, we would run out in September, not May. More importantly, those builds should slow in the second half as seasonal demand picks up. To be fair, the oil traveling by pipeline will eventually find a home in a tank farm or refinery, so it is not correct to completely ignore it. But this inconsistency between oil inventories and storage capacity limits sheds a very different and not so gloomy light on the overall U.S. inventory picture. The real answer is likely somewhere in between as true operational limits would be reached well before we hit the stated storage capacity figure.