Crude oil stocks in the largest US crude storage hub in Cushing, Oklahoma, are quickly approaching critically low levels, Bloomberg reported. Traders generally believe that Cushing storage tanks require around 20 million barrels as a minimum level to maintain normal operations. Inventory levels have dropped more than 4 million barrels in the last two weeks to 31 million, faster than the average decline for this time of year. Inventories are expected to rapidly decrease further due to rising export demand for American light sweet crude.
It marked a sharp reversal from last year’s massive glut caused by the COVID-19 pandemic. The rapid drawdown has been accelerated by an energy crisis that has prompted European and Asian importers to hunt for cheaper barrels. Over the coming weeks, inventories are expected to fall further to the operational low, some major traders said. They said that the depletion in Cushing would not slow down in the near future. Cushing oil inventories dropped by an additional 1.9 million barrels from Friday to Tuesday, an industry survey showed.
