If you are trading the oil market, it's always a good idea to track the oil stocks in Cushing, Oklahoma. Why do this? Cushing is a town filled with oil storage tanks. Oil is stored there before distribution across the U.S.
In a normal market, West Texas Intermediate (WTI) crude trades over Brent crude, which is a thicker oil that needs more refining. Now, however, prices for Brent have traded above WTI. As of 8:40 a.m. EDT, July WTI is trading at $74.47 per barrel, down $1.01, while Brent trades at $74.85 per barrel, down 44 cents.
Crude supplies at Cushing rose to a record 41 million barrels for the week ending June 8, as reported by Genscape. Another analyst, Christophe Barret of Credit Agricole said the stockpiles are now close to operational capacity. He stated: "Everyone says you cannot go much higher than 80% of total capacity, which would be 41 million barrels, because the town can hold 51 million barrels overall."
Prices had risen on China's growth figures, firmer global stock markets and a slightly stronger euro.
If we look back to the oil crash from $147.00 per barrel, it was the oversupply at Cushing that tipped the scales. Traders saw the oversupply and decided to sell. That brought the price down to near $32.00 per barrel. Whether the same pattern will play out this time remains to be seen. One thing is sure, the inventories at Cushing must be worked off before we see oil moving much higher.
