US Crude oil storage space is growing scarce, despite the market demand according to the Energy Information Agency (EIA).
Although oil prices are 40 percent lower than what they were a year ago, US upstream companies are still pumping at record pace to stay competitive. With the Organization of Petroleum Exporting Countries (OPEC) pumping 31.22 million barrels of oil per day (bpd), a two-year high, don’t expect US firms to let up anytime soon.
Storage facilities, such as the popular hub in Cushing, Oklahoma because of its location, have some of the largest stockpiles. The biggest surplus sits in the East and Midwest storage facilities were more than 75 percent of available storage space is in use. According to the EIA, these are the highest rates recorded since they started collecting storage data.
Additionally, oil tankers and pipelines headed to refineries are backlogged due to the volume increases in rail shipments as well as by pipeline. The backlog in the Midwest stood at 35 million barrels in March, 10 million barrels more than previous highs back in March of 2011.
Oil prices will be slow to rise as long as there is a glut from the surplus of crude consistently building in storage facilities across the US.
US stockpiles will continue to build to stay competitive with world producers for market share such as OPEC. China, the world’s top net oil importer, slowed its oil purchases by 25 percent from April to May, according to its government data.
At the close of trading on Monday, WTI fell a dollar to around $58 a barrel.