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HomeBusinessConcerns arise as Cushing oil stocks hit a one-year low, impacting quality...

Concerns arise as Cushing oil stocks hit a one-year low, impacting quality and price.

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U.S. crude oil stockpiles at the Cushing storage hub in Oklahoma have reached their lowest level in 14 months, raising concerns about the quality of the remaining oil and the possibility of falling below minimum operating levels. This reduction in stockpiles adds to an already tight market due to oil supply cuts from Saudi Arabia and Russia, potentially putting upward pressure on oil prices. The drawdown in Cushing inventories has been significant, with levels dropping nearly in half since June, and analysts predict another draw of up to 1 million barrels in the upcoming week.

The decreasing stockpiles at Cushing are a result of strong refining demand, rising crude exports, and future prices that have been weaker than spot prices. However, this has raised operational concerns as tank storage below 20 million barrels, or 10-20% of Cushing’s capacity, is considered close to an operational low. Removing oil at such levels becomes more challenging and can lead to various issues. While some analysts believe seasonal refinery maintenance may help build crude stocks, others warn that refiners will likely exit maintenance quickly to keep up with high fuel demand.

In other oil-related news, the U.S. Interior Department has postponed a sale of Gulf of Mexico drilling rights due to an appeals court ruling that ordered the Biden administration to expand the sale. The sale, originally scheduled for September 27, will now take place no later than November 8. This delay further impacts the oil industry and adds to the uncertainties surrounding oil production and supply.

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