Cushing, Ok: Threat to OPEC

[kadee79]

For OPEC, there are few enemies more fearsome than the tiny Oklahoma town of Cushing.


With oil inventories at Cushing creeping near an all-time high, U.S. benchmark futures prices are struggling to advance despite the promised production cuts agreed to by OPEC, Russia and other producers. And the storage tanks are likely to stay full as refiners park crude in Oklahoma to lower their tax bills.

Cushing, which prides itself as the “pipeline crossroads of the world,” is the delivery point for the West Texas Intermediate crude contract. With tanks that can hold 77 million barrels of crude, enough to supply France for two months, it’s the biggest storage hub in the U.S. The last high point there came in May. Now, after a brief hiatus, the tanks are filling up once again. For the OPEC-led efforts to boost prices, that’s a major problem.

“Part of what OPEC, and in particular the Saudis want to do, is drain the swamp,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “To do that they will reduce deliveries to the U.S. That will eventually be felt at Cushing, but not in a long time.”

Stockpiles rose by 1.22 million barrels last week, following a 3.78 million jump the previous week that was the biggest since 2008. The inflows have pushed up stocks to 66.5 million barrels, within a whisker of the all-time record of 68.3 million set in May. With the promise of production cuts sending forward prices up, that’s encouraging traders and refiners to hold onto inventories, the last thing the Organization of Petroleum Exporting Countries wants to see.

www.msn.com/en-us/money/news/opec-threatened-by-tiny-oklahoma-town-with-soaring-supplies/ar-AAlAboW?li=BBnb7Kz


A "just FYI" article!

[Deleted]

Well, talk about irony.

OPEC; lead by the Saudi's spent the better part of the last 3 years overproducing into oversupply; driving Oil prices into the crapper..

All in an effort to try and snuff out a major uptick in U.S. Domestic Oil production, which found a massive resurgence due to new recovery technologies;

Choosing to take the bite into their wallet, to maintain global dominance and relevancy, the result being due to the stubbornness of the U.S. Producers, coupled with ongoing issues in other economies; that they (the Saudi's) couldn't continue to essentially burn cash in the pursuit..

So the Saudi's led OPEC to engage in a historic agreement to curtail production; in an effort to try and let the supply overburden get used off; thus then boosting prices over the course..

The result of that so far is that, U.S. producers have once again started (albeit slowly) to resume that which they were doing in spades before the Saudi's set about trying to crush them...

The pain of the original course the Saudi's pursued; is going to haunt them for a long time to come.. The true cost of those actions in the immediate term is that the Saudi's have damaged their credibility (both within OPEC and Globally) & proven the lessening of their dominance & relevancy;

Longer term the true cost as measured by the damage to their economy and power in the middle east is yet to be fully seen and ascertained..

Rather a classic "David {U.S.} v. Goliath {Saudi's/OPEC}" story; in which the Saudi's are now starting to feel the true result of what happens in cases where "Mess With A Bull; You Get The Horns".