Cushing stocks reach record high as capacity continues to quickly fill

March 18, 2015 08:32 AM

I am expecting crude oil stocks to increase by about 3 million barrels with total inventories hitting another new record high and still growing. If the actual numbers are in sync with my projections the year over year comparison for crude oil will now show a surplus of 76 million barrels while the overhang versus the five year average for the same week will come in around 91.5 million barrels.

I am expecting crude oil inventories in Cushing to show a build around the year to data average this week as the outflow from Cushing decreased only marginally last week and is still below the normal outflow level. With storage capacity still available in Cushing storage trades are still taking place and will continue to be added in the Cushing area as long as the WTI forward curve economically supports storage trades. Run rates in the PADD 2 region have increased over the last week resulting in refinery demand for crude oil in the region increasing.

The TransCanada (Keystone) Gulf Coast line decreased its pumping rate last week with the line is still running below the 400,000 bpd level. Genscape is reporting a flow of 383,095 bpd or a decrease of 18,431 bpd compared to the previous week. Last week the combination of the TransCanada Gulf line and both Seaway lines moved about 6 million barrels of crude oil out of Cushing or about 88,995 barrels less than the previous week.

This week there was a modest decrease in the net inflow (inflow-outflow) into Cushing primarily driven by the overall inflow into Cushing falling while the outflow showed only a marginally decline. Since the change was not very large this could result a build in Cushing this week that is around the 2015 average to date build.  The net inflow (inflow-outflow) into Cushing decreased to 4.4 million barrels for the week ending March 13 compared to 4.8 million barrels during the previous week.

According to the latest data from Genscape (for more information on Genscape data products visit their website) pipeline outflow from Cushing decreased marginally after decreasing during the previous week. The combined flow rate on the TransCanada Gulf Coast and the Seaway pipelines increased slightly. For the week ending March 13 total net outflow from Cushing decreased by an average of 5,079 bpd. The Seaway pipeline increased by 37,052 bpd and averaged 346,515 bpd while Seaway Twin averaged 129,042 bpd for the week ending March 13. The inflow into Cushing decreased modestly by 67,135 bpd as the Flanagan South Pipeline pumping rate declined compared to the previous week. The Hawthorn pipeline is flowing for the tenth week in row at about the same rate as the previous week.

I am expecting a build in crude oil stocks in PADD 3 even as the outflow of crude oil from PADD 2 into the Gulf decreased marginally last week. Following is the status of PADD 3 crude oil stocks compared to working storage capacity in the region. As shown working storage capacity in PADD 3 crude oil inventories increased to 77.9% utilization level. On the other hand Cushing stocks are now running at 72.8% of workable capacity as Cushing inventories increased during the previous week. I am now expecting Cushing inventories to increase again in this week’s report as mentioned above.

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