Oklahoma Hub Drain Propels Crude in New York
(Bloomberg) -- Crude in New York clung to gains as investors focused on depleting oil stockpile levels at Cushing, Oklahoma, the largest commercial oil depot in the U.S.
Futures in New York climbed as much as 1.6% on Thursday, while Brent’s gain remained limited. Data from the Energy Information Administration on Wednesday showed stockpiles at the Cushing storage hub at the lowest level since December 2018 as the startup of new pipelines from the Permian help to relieve inventory pressure.
These Permian conduits enable oil supplies to bypass Cushing and head straight for markets overseas, which is allowing WTI to rally and is holding back Brent, according to Michael Loewen, director of commodity strategy at Scotiabank.
Crude futures in New York are poised for the biggest weekly gain since mid-July as U.S. government data this week showed declines in crude and fuel stockpiles. Investor sentiment has also improved as statements from China’s Commerce Ministry signaled the country wouldn’t immediately retaliate against the latest U.S. tariff increase. President Donald Trump said Thursday that the U.S. and China are scheduled to have a conversation about trade today.
West Texas Intermediate for October delivery advanced 83 cents to $56.61 a barrel at 11:15 a.m. on the New York Mercantile Exchange. Futures are on track for a 4.5% rise this week.
Brent for October settlement added 33 cents to $60.82 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a $4.20 premium to WTI.
Since the startup of Plains All American Pipeline LP’s Cactus II crude pipeline and EPIC Pipeline Co.’s line this quarter, Cushing stockpiles have drained around 12 million barrels. Meanwhile, domestic net crude imports for last week dropped to nearly half of what they were a year ago.
"Exports will keep growing and as that happens, it will push more of U.S. oil to global markets, improving Cushing prices on a relative basis to Brent," Loewen said. "That will mean a narrow WTI-Brent spread."
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