Where Is the Crude Oil Market Headed after Failed Doha Meeting?

(Continued from Prior Part)

EIA’s Cushing crude oil stocks

The EIA (U.S. Energy Information Administration) reported that Cushing crude oil stocks fell by 1.8 MMbbls (million barrels) to 64.5 MMbbls for the week ending April 8, 2016, compared with the previous week. Cushing crude oil stocks hit 67.5 MMbbls for the week ending March 11, 2016, the highest level for Cushing crude oil inventories ever. Cushing crude oil stocks fell for the third time in the last four weeks. The fall in Cushing crude oil stocks could support crude oil prices.

Cushing crude oil inventory storage capacity

Cushing, Oklahoma, is the delivery point for NYMEX-traded crude oil futures contracts. Cushing is the largest crude storage hub in the US. Its crude oil storage capacity is 73 MMbbls. The inventories at Cushing are close to record levels due to new pipelines in 2014 and 2015.

Nationwide crude oil inventories

Nationwide crude oil inventory rose by 6.6 MMbbls (million barrels) to 536.5 MMbbls for the week ending April 8, 2016, compared with the previous week. To learn more, read US Crude Oil Inventory Hit the Highest Level Ever: What’s Next? The ups and downs in the US crude oil stocks impact storage costs.

Impact of near-record Cushing and nationwide crude oil inventories

Cushing crude oil stocks are 5% higher than they were in the same period in 2015. The near-record Cushing crude oil stocks could pressure crude oil prices. The record nationwide US crude oil inventories could also pressure crude oil prices. Low oil prices affect oil producers like Ultra Petroleum (UPL), Swift Energy (SFY), Northern Oil and Gas (NOG), and Comstock Resources (CRK).

The ups and downs in crude oil prices also affect ETFs like the ProShares Ultra Oil & Gas (DIG), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), and the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).

Read more about the US crude oil rig count in the next part of the series.

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