Crude Oil inventories

[dan_s]

EIA: Crude oil storage capacity and inventories have increased in Cushing, Oklahoma and PADD 3 since September

"Commercial crude oil inventories in Cushing, Oklahoma (located in Petroleum Administration for Defense District, or PADD, 2) and the Gulf Coast (PADD 3) totaled a record high 309.4 million barrels as of the week ending November 27. Based on the recently released storage capacity and line fill data in the September Petroleum Supply Monthly (PSM), EIA estimates 70.2% utilization of working crude oil storage capacity in Cushing, Oklahoma and PADD 3 on a combined basis. This utilization level is only slightly below the record set in the week ending April 24 of this year."

I get lots of e-mails from members worried about the high crude oil inventories. They wonder what will happen if storage fills.

1. There is NO danger of storage filling. Total storage capacity in the U.S. is ~640 million barrels, so we have a lot of remaining capacity.
2. All of the oil that goes to storage is owned by someone, primarily the refiners.
3. Refiners are smart to buy as much crude oil as they can at today's depressed prices. The spread between WTI and Brent will shrink as U.S. oil production of light oil declines.

Keep in mind that the weekly storage report is a "wild ass guess" by EIA. It includes over 100 million barrels for field level storage and pipeline fill. They have no way of knowing field level storage so they just guess at it each week.