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Cushing inventories enter the yellow zone

Cushing inventories enter the yellow zone

The US Energy Information Administration (EIA) released more detailed crude oil inventory data this week, revealing exactly how much storage capacity is available in the US. 

PETROLEUM ADMINISTRATION FOR DEFENCE DISTRICTS (PADD) Source: Energy Information Administration (EIA)

PETROLEUM ADMINISTRATION FOR DEFENCE DISTRICTS (PADD)
Source: Energy Information Administration (EIA)

The EIA releases data by Petroleum Area Defence District (PADD) and the Cushing Storage Terminal, which is located in the Midwest region of PADD 2. As is the case with everywhere in the world, the US has been frantically building more oil storage tanks. The latest EIA results shows exactly where new storage is being added and at what rate.

New storage tanks

Not surprisingly, PADDs 2 and 3 in the US Midwest and Gulf Coast have been adding the most storage volumes. Almost 23 million barrels worth of new tanks were added in the Midwest (including volumes at Cushing) and another 16.6 million barrels in the Gulf Coast over the past 6 months. PADDs 2 and 3 are the largest refining districts in the US and some of the largest in the world.

Note that the EIA distinguishes between shell volume (the total volume of the tank) and working capacity (the useable volume). A certain portion of the tank is considered "dead space", typically the top and bottom 10% of the tank. A tank which reaches 100% working capacity is technically full.

Rising inventory volumes

Inventory volumes have been rising everywhere throughout the US, climbing an average of 20 to 25% over the past 6 month. The only exception is the West Coast area (PADD 5), which is blocked by the Rocky Mountains and relies more heavily on railcars and tankers to deliver crude. PADD 5 has a much tighter oil supply/demand curve due to declining oil production in Alaska and lack of refining capacity on the US West Coast.

PADD 2 is the primary destination for Canada's heavy oil exports from Alberta, delivered mostly by pipeline. The volume of Canadian oil delivered to the PADD 3 Gulf Coast area has been steadily rising in recent years, increasingly serviced through crude-by-rail exports. Should the Keystone XL pipeline ever be built, more Canadian oil can be redirected from the Midwest to PADD 3 in the Gulf Coast.

Crude oil storage utilization rates

Utilization rates south of the border have increased considerably since 6 months ago.

Most significant are stockpiles at the Cushing Storage Terminal in Oklahoma. Inventories rose an impressive 25% over the previous 6 months, increasing the utilization rate from 71% to 87% of working capacity.

total-US-crude-inventories.png
total-US-crude-oil-inventories.png

Note that Cushing volumes are included as part of PADD 2 tank farm volumes.

Inventories across the US have started to ease slightly in the late spring due to a slowdown in US production and will likely see a decline in Canadian imports from the Alberta wildfires. Regardless, US storage capacity seems to have a long way to go before getting close to being maxed out.

AERIAL VIEW OF THE CUSHING STORAGE TERMINAL

AERIAL VIEW OF THE CUSHING STORAGE TERMINAL

Strategic Petroleum Reserves

Strategic Petroleum Reserve (SPR) tanks are pretty much topped up, reported at 95% of capacity. The government has not been adding to SPR volumes in recent years. Total SPR capacity is about 714 million barrels, representing about 5 weeks of domestic consumption.

Note that all storage volumes quoted excludes crude oil contained in pipelines, rail cars and tankers. The next EIA update on US inventory capacity will be released in November. EIA inventory numbers are posted weekly on our "Energy Statistics" page, updated every Wednesday morning.

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