U.S. Crude Oil Storages Reported at 60% of Capacity

EIA notes this capacity-use calculation reflects only crude oil stored in tanks or underground caverns at tank farms and refineries, and excludes some crude that is included in commercial inventory data, such as pipeline fill and lease stocks held in production areas. Capacity was reported at about 67% in Cushing, Okla., the delivery point for West Texas Intermediate futures contracts, com­pared to 50% last year. Working capacity in Cushing alone was about 71 MMbbl, or more than half of all Midwest, or PADD 2, working capacity and about 14% of the national total.

Unlike its semiannual reports detailing crude oil and product storage capacity, the agency’s “Weekly Petro­leum Status Report” includes estimates for pipeline fill, lease stocks, and crude in transit from Alaska. Subtracting those volumes removes about 120 MMbbl from inven­tories, or nearly 30% of the national total. But even with those adjustments, estimates of working storage capacity utilized are only slightly overstated because estimates are not available for volumes in floating storage, tank bottoms, and oil on rail or barges, EIA explains.

Meanwhile, market watchers comment that with U.S. crude inventories at their highest in three decades, the surplus is keeping prices low compared to international rivals. And there is no sign of a let-up in stock builds. With forward prices higher than current prices, the contango market is encouraging yet more barrels to be placed in storage, with the only limitation being the ability to find space. Furthermore, lower oil prices are at the same time putting downward pressure on propane prices.