2 Jan

Cushing Inventories Could Boost Crude Oil Prices in 2018

WRITTEN BY Gordon Kristopher FEATURED IN Commodities

Cushing inventories  

Cushing, Oklahoma, is the largest crude oil storage hub in the US. Market surveys estimate that the crude oil inventories at Cushing could have fallen on December 22–29, 2017. Any fall in Cushing inventories benefits oil (UCO) (DWT) prices.

US crude oil (UWT) prices are at the highest level since June 2015. Higher oil (USO) prices favor funds like the Vanguard Energy ETF (VDE) and the Fidelity MSCI Energy Index (FENY). These ETFs have exposure to US energy companies.

Cushing Inventories Could Boost Crude Oil Prices in 2018

EIA’s Cushing inventories 

Cushing inventories fell by 1,584,000 barrels to 51.4 MMbbls (million barrels) on December 15–22, 2017, according to the EIA. The inventories fell 3% week-over-week and by 15,021,000 barrels or 22.6% YoY (year-over-year).

Any fall in the inventories benefits oil (USO) prices. Higher oil (DWT) prices favor energy producers’ (IXC) (IYE) earnings like Viper Energy (VNOM), EOG Resources (EOG), and Whiting Petroleum (WLL).

EIA’s US crude oil inventories 

The EIA estimated that US crude oil inventories fell by 4.6 MMbbls to 431.8 MMbbls on December 15–22, 2017. The inventories also fell by 54.2 MMbbls or 11.2% YoY. The inventories also fell ~20% from their peak in March 2017.

Impact  

Cushing crude oil inventories were near the lowest level since February 27, 2015. They also fell ~26% from their peak on April 7, 2017. US crude oil (UCO) prices have risen 12% since April 7, 2017. Any fall in US and Cushing inventories benefits oil (DWT) prices.

Next, we’ll discuss US crude oil rigs.

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