Cushing Oil Tank Runs Dry Amid Global Demand Surge

The oil tank at Cushing, Oklahoma has run dry for an unprecedented period. The storage site's inventories have remained below 20 million barrels since June 19, the lowest levels seen since October 2014. This is significant because Cushing is the physical delivery point for West Texas Intermediate futures, one of the world's most actively traded oil contracts.

The drawdown in Cushing stocks coincided with disruptions to Middle East oil flows following the Strait of Hormuz crisis. As global buyers turned towards American barrels, demand for U.S. crude exports increased, causing Cushing inventories to fall by 800,000 barrels a week from May.

The EIA has clarified that storage tanks cannot be emptied to zero under normal operating conditions. Every tank requires a minimum volume, called a tank bottom, to keep pump suction effective and pipeline connections functioning. This distinction matters for understanding the actual supply available at Cushing, as reported inventory numbers may overstate the available crude.

The spread between Brent and WTI briefly turned negative, indicating that buyers were competing hard for crude sitting at a hub that increasingly couldn't spare it. The landlocked benchmark trading above the seaborne one reflects stress in the market.