Vermilion Energy Inc T.VET

Oil at Cushing

[whoLuLu]

Dwindling Oil Supply at U.S. Hub Is Rippling Into Global Markets...has sent gauges of market health known as timespreads soaring to their most bullish levels in years...Bloomberg

 

https://finance.yahoo.com/news/dwindling-oil-supply-u-hub-164147468.html

 

 

Alex Longley and Devika Krishna Kumar

Mon, October 25, 2021, 9:41 AM

 

 

"(Bloomberg) -- The culprit behind the latest jump in oil prices isn’t soaring natural gas prices or even OPEC+’s limits on output but rather what is happening at America’s largest oil storage hub in Oklahoma...."

 

 

Traders are fretting that stockpiles in Cushing will fall as low as they physically can. It has sent gauges of market health known as timespreads soaring to their most bullish levels in years, a move that is now spilling over to the global Brent benchmark.

Cushing is the delivery point for U.S. crude futures and one of the largest storage hubs in the world. Supply and demand balances there drive daily oil trading worth hundreds of millions of dollars. The higher the cost of oil for prompt delivery relative to later-dated contracts reflects just how short supply is relative to demand.

The numbers are eyewatering. For U.S. crude, nearby contracts are at their biggest premium to those for five months later since 2018 -- when Cushing stockpiles were near operational lows. The December-December spread, a favored trade of the world’s oil hedge funds, is at its strongest since 2013 a year when prices averaged almost $100 a barrel.

As a result, the oil market is doing whatever it can to keep U.S. crude at home. West Texas Intermediate crude was its smallest discount to international benchmark Brent since April 2020, a move that’s set to curb flows abroad. That means similar quality North Sea barrels are expected to rally, and that is spurring buying of the global Brent benchmark’s structure. Its closely-watched Dec.-Red-Dec. spread is just 60 cents away from a record.