Crude oil inventories at the Cushing, Oklahoma storage hub fell below 20 million barrels for the run of weeks from the week ending June 19 through the week ending July 10, according to the U.S. Energy Information Administration's Weekly Petroleum Status Report.
Why storage cannot hit zero
Storage tanks and the pipe infrastructure that connects them need a minimum volume of product on hand to keep operating, a level the industry calls tank bottoms. Below that minimum, pump suction becomes ineffective and the facility cannot function. That floor sits below a tank's shell capacity, the total volume the tank can hold by design, and below its working storage capacity, the maximum safe fill volume minus the tank bottom. The EIA is reviewing the results of a pilot study aimed at better defining minimum working inventory levels at select petroleum storage facilities.
The price spread went negative
The drawdown showed up in the WTI-Brent spread. In mid-June, when Cushing stocks first dropped below 20 million barrels, the spot price differential between Brent crude and WTI priced at Cushing fell to just below zero dollars a barrel. The five-day rolling average of that spread turned negative from June 18 to June 24, and again from July 2 to July 8, as the WTI-Cushing price rose above the Brent spot price. That put the spread at its lowest point since January 2022.
The EIA said the high WTI-Cushing price points to inventories sitting close to tank bottom levels, adding pressure on Cushing storage operators and the broader mid-Continent crude market. Storage facilities generally operate within their working storage capacity, which keeps inventories from truly falling to zero under normal conditions, so not every barrel counted in inventory data is necessarily accessible. In extreme cases, a facility can be unable to deliver product even though it is not technically empty, because it has hit the bottom of its working storage capacity.
