June 23, 2023 [Reuters]- U.S. crude oil inventories at the Cushing, Oklahoma, storage hub have risen to their highest in two years, as outages at Midwestern refiners crimp demand and higher flows from Canada add to supply.
Stockpiles at Cushing, the delivery point for U.S. crude oil futures, have climbed for eight consecutive weeks after falling earlier this year. Overseas demand for U.S. crude and an end to refinery outages should reverse the build, said analysts.
“We’re going to be sending more (oil exported) abroad,” said Phil Flynn, an analyst at Price Futures Group. “The supply side continues to remain tight if you look at the big picture.”
A spate of unexpected refinery outages in the Midwest have added to the inventories, which rose to 42.1 million barrels in the week to June 9, the highest since June 2021, Energy Information Administration data showed.
IIR Energy was tracking 579,000 barrels per day (bpd) of oil offline in May in the central U.S., double the 256,000 bpd offline the same month a year ago, said Hillary Stevenson, a senior director at the company.
Outages at BP Plc’s and Cenovus Energy Inc’s (CVE.TO) 160,000-bpd Toledo, Ohio refinery and Phillips 66’s (PSX.N) 149,000-bpd Borger, Texas refinery likely have contributed to higher Cushing stockpiles, Stevenson added.
Slightly higher flows from Canada also added to the supplies, with Enbridge Inc’s (ENB.TO) 702,000-bpd Flanagan South pipeline showing elevated flows in May and so far in June, said John Trischan, senior research manager of oil transportation at Wood Mackenzie.
Canadian crude may have been sent toward Cushing as feedstock for a restart of the Toledo refinery, which had a fire last year, said Matt Smith, lead oil analyst for the Americas at Kpler.
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