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US Crude Production Declines as Cushing Continues to Pressure WTI (Part 6 of 10) (Continued from Part 5) Cushing inventories
Cushing, Oklahoma is the delivery point for NYMEX crude futures contracts. It’s where a lot of crude supply sources meet a lot of the crude demand sources. Inventory levels at Cushing reflect the pace that the increasing US oil supply is moving from major inland production areas—like the Bakken in North Dakota and the Permian in West Texas—to the major refining hubs situated on the Gulf Coast.
A buildup of inventories at Cushing pressures WTI crude price downwards and vice versa. So, monitoring inventory levels at Cushing is a very important part of understanding what’s going to happen to “benchmark” WTI (West Texas Intermediate) prices.
Crude stocks at Cushing have continuously been rising since October 2014 when stocks were close to ~19 million barrels. Last week, stocks at Cushing increased ~2.63 million barrels to 58.9 million barrels. These levels are the highest in the US Energy Information Administration’s (or EIA) data going back to April 2004.
To put things further into perspective, according to the EIA, Cushing has about 71 million barrels of crude storage. Current storage is at ~83% of the storage capacity, as per the EIA. The highest utilization record at Cushing was 91% in March 2011.
The fact that inventories have been continuously rising for the past five months increases the possibility that Cushing will soon approach full capacity.
If the oil hub reaches its full storage, oil prices could tumble further, which will in turn hurt the margins of companies such as Chevron (CVX), Whiting Petroleum (WLL), Concho (CXO), and ExxonMobil (XOM). CVX and XOM are components of the the Energy Select Sector SPDR ETF (XLE) and make up 10% and 29% of the ETF, respectively.
Continue to Part 7 Browse this series on Market Realist:
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Concho Resources Inc.
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CODE : CXO |
ISIN : US20605P1012 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Concho Resources is a exploration company based in United states of america. Concho Resources is listed in United States of America. Its market capitalisation is US$ 9.6 billions as of today (€ 7.9 billions). Its stock quote reached its highest recent level on July 05, 2019 at US$ 99.97, and its lowest recent point on January 15, 2021 at US$ 65.60. Concho Resources has 146 059 000 shares outstanding. |