NEW YORK (Reuters) – The volume of oil sitting in 300 steel tanks in a nine-square-mile radius in Cushing, Oklahoma has long been a key barometer for the health of U.S. crude supply and the nation’s benchmark for daily trading of billions of dollars in the commodity. But those tanks could soon drain to levels near effectively empty, even as U.S. oil production soars past a new record of 10.4 million barrels per day. Oil supplies have fallen before in Cushing for a variety of seasonal or market-driven reasons. But this time, there is no shortage of crude in the market. In fact, U.S. production is straining pipeline and storage capacity. The declining volumes stored at Cushing reflects a more permanent shift, underscoring the hub’s waning influence as the primary measuring stick for the U.S. oil market and the leading barometer of future supply, demand and prices. (For a graphic of falling oil inventories at Cushing, see: tmsnrt.rs/2GRh5GR ) Companies are now spending millions of dollars building infrastructure to facilitate trading and storage elsewhere, such as in Houston and other Gulf Coast ports. That could pave the way for a change in the U.S. benchmark oil price, used to value tens of… continue reading
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Source: CTRM Center