Thursday, April 2, 2015
Crude oil inventory data for the week ended Feb. 20 showed total utilization of storage capacity in the U.S. standing at about 60%, compared to 48% at the same time last year, the Energy Information Administration (EIA) reports. Most crude oil stocks are held in the Midwest and Gulf Coast, where storage tanks were at 60% and 56% of capacity, respectively, as of Feb. 20.
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.
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.
