Crude oil inventories at Cushing, Oklahoma, hub down 32% over the past two months

Crude oil inventories at Cushing, Oklahoma, the primary crude oil storage location in the United States, decreased 13 million barrels (32%) over the past two months. On March 21, Cushing inventories were less than 29 million barrels, more than 20 million barrels lower than a year ago and the lowest level since early 2012. Cushing is the delivery location for the New York Mercantile Exchange (Nymex) West Texas Intermediate (WTI) crude oil futures contract.

The recent drawdown of stocks at Cushing resulted from three factors:

• The startup of TransCanada's Cushing Marketlink pipeline, which is now moving crude oil from Cushing to the U.S. Gulf Coast
• Sustained high crude oil runs at refineries in Petroleum Administration for Defense Districts (PADD) 2 (Midwest) and 3 (Gulf Coast), which are partially supplied from Cushing
• Expanded pipeline infrastructure and railroad shipments that have made it possible for crude oil to bypass Cushing storage and move directly to refining centers in PADDs 1 (East Coast), 3 (Gulf Coast), and 5 (West Coast)

Despite the considerable decline in Cushing inventories, crude oil stocks remain above the top of the 2005-08 range. Over the past several years, much of the crude oil production growth from tight oil formations in the Midcontinent was delivered to Cushing storage. Because takeaway capacity from Cushing storage was insufficient, inventories there rose. Currently, Cushing inventories have fallen to levels that reflect current market conditions, and although they are reduced, the levels remain consistent with crude oil supply requirements to meet regional refinery demand.

Principal contributors: Hannah Breul, Mike Leahy