The US exports crude oil rather than store
Exports from the United States, the world's largest producer of crude oil, have increased in recent weeks after Russia's invasion of Ukraine, and domestic oil, typically destined to the Cushing, Oklahoma, storage hub, is said to be exported via the Gulf Coast.
The invasion upset the oil market as companies stopped buying Russian oil and prices skyrocketed. Buyers around the world are trying to find crude oil wherever possible.
Known as the crossroads of the oil industry, Cushing, Oklahoma, USA is the region where owners of West Texas Intermediate futures contracts take delivery of the product and have ample storage capacity.
U.S. crude oil exports rose to 3.8 million barrels per day for the week of March 18, reaching the highest level since July 2021, according to data from the U.S. Department of Energy. Cushing's stocks are now at 25.2 million barrels and this is the lowest level in four years reached in early March.
US crude is attractive to world buyers as it trades at a steep discount of around $7 under the global Brent benchmark. That spread hit $9.20 earlier this month, which was the steepest discount in almost two years.
Worldwide demand has risen to nearly pre-pandemic levels, but supply has remained low as the Organization of the Petroleum Exporting Countries (OPEC) has been slow to return supply cuts that took effect during the pandemic in 2020. And on top of that, the Russian supply could drop by 2-3 million barrels a day.
Low storage levels are also a problem in Canada, the world's fourth-largest producer of crude oil.
Oil refinery maintenance, which typically happens in the spring, can increase storage in both Canada and the United States.
The price of US Midland crude for fast delivery rose in March as global supply contracted after Russia's invasion of Ukraine and less oil was stored in Cushing, Oklahoma.
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