U.S. crude oil storage capacity utilization now up to 60%
Source: U.S. Energy Information Administration, Weekly Petroleum Status Report and Working and Net Available Crude Oil Storage Capacity
Note: Inventories shown in the graph do not include pipeline fill, lease stocks, or oil in transit from Alaska. PADD is the Petroleum Administration for Defense District.
Crude oil inventory data for the week ending February 20 show that total utilization of crude oil storage capacity in the United States stands at approximately 60%, compared with 48% at the same time last year. Most U.S. crude oil stocks are held in the Midwest and Gulf Coast, where storage tanks were at 69% and 56% of capacity, respectively, as of February 20. This capacity use calculation reflects only crude oil stored in tanks or underground caverns at tank farms and refineries, and excludes some crude oil that is included in commercial inventory data, such as pipeline fill and lease stocks held in production areas.
Capacity is about 67% full in Cushing, Oklahoma (the delivery point for West Texas Intermediate futures contracts), compared with 50% at this point last year. Working capacity in Cushing alone is about 71 million barrels, or more than half of all Midwest (as defined by Petroleum Administration for Defense District 2) working capacity and about 14% of the national total....MORE, including this helpful drawing:
U.S. crude-oil storage tanks are filling rapidly, with inventories posting their largest gain in nearly 14 years last week.
The cost to store oil is also rising, as tank space becomes scarce in some regions. Gulf Coast storage is at an all-time high of 219.9 million barrels, the U.S . Energy Information Administration said Wednesday, which is about 77% of capacity.
Perhaps coincidentally, CME Group Inc. said Wednesday that it’s starting a new futures contract to trade – what else? – Gulf Coast crude-oil storage. CME owns the New York Mercantile Exchange.
The exchange operator says this is the first-ever oil-storage futures contract. It will work like this:
At the beginning of every month, a 30-minute online auction will be held through brokerage NEO Markets Inc. In the auction, LOOP LLC – known to many as the Louisiana Offshore Oil Port – will sell 7,000 contracts. Each contract will give the buyer the right, but not the obligation, to store 1,000 barrels of sour crude oil in LOOP’s Clovelly Hub in Louisiana for a month.
Once the contracts are sold through the auction, they can be bought and sold freely. At the end of the month, anyone holding a contract can use the storage space, which will hold the oil in either an above-ground storage tank or an underground cavern.
The storage can be used for only three types of sour crude. Conveniently, those three types of crude will be tradable using CME’s Gulf Coast sour-crude futures contract, which is being renamed the LOOP Gulf Coast Sour Crude Oil contract.
So, who will use the oil-storage futures?
Producers, transportation companies and refiners all have exposure to commercial storage rates. A storage futures contract could allow those parties to lock in those costs ahead of time or trade them for profit....MORE
