U.S. crude oil prices have surged and the futures strip has moved into a sharp backwardation as inventories have drained away from the NYMEX delivery point at Cushing in Oklahoma.
Until recently, Cushing was the “pipeline crossroads” of the United States, a major storage and logistics hub for the domestic production and refining system; inventory changes there tended to reflect wider market conditions. Cushing crude stocks have depleted by 18 million barrels since the end of June compared with just 14 million barrels elsewhere.
In Europe, crude and other feedstock inventories actually increased by 6 million barrels between the end of June and the end of August, according to data published by the European Commission. Changes in stocks held around Cushing get even more attention because of its former importance as a logistics hub and its function in the NYMEX futures delivery process.
In consequence, the net position in WTI climbed to 225 million barrels up from a record low of just 46 million barrels. The cuts removed a total of 85 million barrels from the market in July and August and will reach 245 million by the end of 2023 if implemented in full.