Crude oil stocks at Cushing, OK (where West Texas Intermediate futures contract is settled) continue to build to levels not seen for at least the past five years. Some of that buildup is of course due to lower demand, as the US economy slows further.
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| Source: JPM |
There is also a structural component to this inventory rise. The US pipeline infrastructure is still insufficient to move the required amounts of crude to the various refineries. A number of pipeline projects are in the works to address this, but it may be a while before they have an impact.
These inventory levels have certainly put downward pressure on prices and unless we see a substantial reduction, WTI price will stay subdued (particularly relative to Brent).
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