Since a national emergency was declared in the US on 13 March, up until 24 April, US commercial crude oil inventories increased by 74 million bbl (16 per cent) and are now 8 million bbl below the record-high value set in March 2017, according to data in the US Energy Information Administration’s (EIA) weekly series.

Commercial crude oil inventories for the week ending 10 April increased by 19.2 million bbl, the largest weekly change in EIA’s data. Inventories in the crude oil storage hub in Cushing, Oklahoma, increased by 24.9 million bbl (69 per cent) from 13 March to 24 April. The weekly inventory builds in Cushing for the weeks ending 3, 10, and 17 April are the three largest weekly inventory builds on record.

Because market participants that hold West Texas Intermediate (WTI) futures contracts to expiration must take physical delivery of WTI crude oil in Cushing, the availability of crude oil storage there is important to facilitate the physical transfer. On 20 April 2020, the scarcity of available crude oil storage at Cushing meant several market participants sold their futures contracts at negative prices, in effect paying counterparties to close out of their contracts for them. 

Refiners have been able to reduce the amount of material they run through refineries (as measured by gross inputs, which includes crude oil, unfinished oils, and natural gas plant liquids) relatively quickly in response to falling demand, but crude oil production has not responded as quickly, leading to large crude oil inventory increases.

From 13 March to 24 April, Gulf Coast inventories increased by 36.4 million bbl (20 per cent) to 221.6 million bbl. The increase of 10.2 million bbl in the week ending 10 April was the fourth-largest increase in the Gulf Coast region on record.

In EIA’s Weekly Petroleum Status Report (WPSR) published last week, US crude oil storage has reached 61 per cent of working capacity, up from 60 per cent the previous week. In the Gulf Coast and Midwest, storage capacity utilisation rose to 60 per cent and 65 per cent, respectively. Within the Midwest region, storage utilisation at Cushing, Oklahoma, rose to 81 per cent.

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4th May 2020