The inland tank farm and pipeline hub that is the delivery point for NYMEX WTI crude futures, and whose storage level is the single most watched US oil statistic.
Cushing has around 90 million barrels of working storage and sits at the junction of pipelines from Canada, the Permian and the Gulf Coast. Because cl is deliverable there and nowhere else, the contract's price is the price of a barrel in a landlocked Oklahoma tank, not the price of oil in general.
That geography is the whole explanation for the brent-wti-spread and for the 2020 collapse. When Cushing approaches its operational limit, the front contract can detach violently from the rest of the curve, because a long who cannot take delivery has nowhere to put the oil.
Example: with tanks at 78 million of 90 million barrels of usable capacity, traders treat storage as effectively full — the last few million barrels are pipeline fill and tank bottoms. Front-month spreads typically blow out to super-contango well before the reported number hits capacity.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.Contango and backwardation. A futures curve shows what buyers will pay for delivery in one month, two months and so on. When later contracts cost more than the spot price the curve is in contango; when they cost less it is in backwardation.
Educational only, not advice. Spotted an error? Post in Site Feedback.