Cushing Oil Hub Hits Lowest Level Since 2014 Amid Global Demand Surge

The oil storage hub at Cushing, Oklahoma has hit its lowest level since October 2014, reaching just 20.04 million barrels as of July 10. This is a significant concern for the global energy market, particularly in light of recent disruptions to Middle East oil flows following the Strait of Hormuz crisis.

The drawdown at Cushing coincided with increased demand for U.S. crude exports, which rose sharply as global buyers turned towards American barrels. As a result, the physical buffer that normally absorbs swings in supply and demand got drawn down, causing inventories to fall by about 800,000 barrels per week.

The EIA has noted that storage tanks cannot be emptied to zero under normal operating conditions, with every tank requiring a minimum volume - called a tank bottom - to keep pump suction effective and pipeline connections functioning. This distinction is crucial in understanding the actual availability of crude supply, as reported inventory figures may not accurately reflect deliverable supplies.

The spread between Brent and WTI oil prices briefly turned negative, with WTI trading above Brent from June 18 to June 24 and again from July 2 to July 8. This unusual phenomenon reflects the intense competition for crude sitting at a hub that is increasingly unable to spare it.