Fear that Oil Storage will fill is all hype

[dan_s]

The fear that U.S. oil storage facilities will fill up and drive down the price of oil have been around for over a year now. It is not something you need to worry about. Here is an update.

http://www.oilandgas360.com/cushing-full-june/

There is a lot more flexibility in the system than Wall Street can understand.

[mkarpoff]

Really? After saying for months that Cushing filling up is a myth, we now have to worry about it..or did you mean we do "not" have to worry about it? And if we do have to worry about it, what do we do about it. Color me confused.

[dan_s]

I fixed the post. Sorry about the confusion.

Just keep in mind that oil does not go to a storage location because it has nowhere else to go. Someone (usually a refiner) buys the oil from a producer and sends it to a storage location. Refiners are building low-cost crude inventory because they see high prices and possibly shortages ahead.

The amount of oil in storage will continue to build for a few more months. It ALWAYS increases this time of year. In May, the refiners will ramp up gasoline production.

[mkarpoff]

Thanks for the good laugh after the good jolt. Very interesting typo.

[dan_s]

Obviously, there are a lot of people (including our government) that want oil prices to stay low. Low fuel prices are good for consumers (i.e. voters) and for the economy. Gasoline prices always go up each summer because it cost more to make the summer blends, which require more crude oil and less NGLs.

I filled up a Sams yesterday for $1.49/gallon, but the low gasoline prices will not last much longer.