There was a lot of talk this past Spring that as a nation we might max out our strategic storage capacity for crude oil Cushing, OK. That didn’t actually happen because we began seeing strong demand from the refiners. Now all of a sudden we are starting to see more headlines suggesting that Cushing could fill-up and overflow this fall. From what Reuters reported, Cushing stocks are an estimated 39 million barrels higher than last year, actually the highest year-over-year on record. The way I understand it, we never had the big drawdown in oil supply that many had projected this summer, production has remained near record levels and we are heading into a period of time where refiners like to traditionally shut down for maintenance. The EIA reported yesterday that weekly gasoline demand was 9.399 million barrels, down from 9.749 million the prior week. Keep ​in mind demand is still running about 4% higher than last year, but it’s looking as if we might have peaked. Energy insiders are worried that when Cushing, OK maxes out storage, which might be sooner than most think, excess crude oil will be forced into the marketplace at discounted prices. From what I’ve heard that’s why many spec players have been bear-spreading in anticipation of the nearby upfront glut of supply. Below is a graphic that shows high crude oil inventories have pushed since 2005.

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