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Crashing Cushing Inventories Boost Oil Prices

Crashing Cushing Inventories Boost Oil Prices


Oil prices jumped on Thursday after the EIA reported a surprise drawdown in crude oil inventories, ending several consecutive weeks of inventory builds. The report was the most bullish in weeks, surprising an oil market that was settling in for an extended period of stock increases on the back of soaring U.S. oil production.

On the production side, things also looked more bullish than many had expected. The weekly estimates should be taken with a grain of salt, and one week’s worth of data do not equal a lasting trend, but in the most recent data release, U.S. oil output fell by 1,000 bpd – essentially flat from the week earlier.

It was the first time in 2018 that the U.S. hasn’t seen a significant production increase, and because it has occurred counter-seasonally – this is typically a time when crude demand tends to soften – the report was interpreted by the oil market as rather bullish. WTI and Brent posted sizable price gains on Thursday.

Interestingly, however, the inventory declines are particularly pronounced at the key oil hub of Cushing, Oklahoma, often likened to the “pipeline crossroads of the world” and home to the settlement of the WTI benchmark.