December 13, 2021 [Trusted Energy Intelligence] – Crude inventories at the nation’s biggest storage hub have recovered above a key threshold, easing some fears of a future supply shock.
Stockpiles at Cushing rose above 30 million barrels last week, marking four consecutive builds, according to data from the Energy Information Administration. Earlier this year, inventory levels seemed to be on pace to slide toward what many in the market considered the minimum level needed to maintain operations.
The precipitous decline through October and November sent the price difference between West Texas Intermediate oil contracts for immediate delivery versus the next month to its widest premium in years, a bullish structure known as backwardation.
Inventories at the delivery point for benchmark futures rose by about 2.4 million barrels last week, the biggest increase since February. This has helped the prompt spread narrow to 25 cents a barrel from $1.88 a barrel in early November, when it reached the highest since 2018.
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