Credit: Shutterstock photoThis week the main reason why crude oil moved up and down was the continuing saga surrounding the Seaway pipeline. The historic reversal of this pipeline was perhaps the most important reversal of liquid since they changed the direction of the Chicago River and was seen as a major step forward in taking advantage of the new boom in US oil and Canadian sands production and alleviating the record glut at the storage terminals in Cushing Oklahoma.
Cushing Oklahoma is the delivery point or the NYMEX futures contract and the area is rich in the history of the global oil market. In the early 1900's, rail lines were built to Cushing and it became a major hub for oil when oil was discovered on the border of Cushing and Drumright, Oklahoma and Cushing became a major early refining center, shipping products to the Midwest by rail. Even as oil production in the area started to decline, the storage facilities and pipeline that were built made Cushing the perfect place to become what was known as the "Pipeline Crossroads of the World". Pipelines were built so oil connected the Gulf Coast with northern refiners to feed the oil hungry Midwest and North.
Yet now because of the boom in North American production and the reduction of refining capacity, oil kept piling up. Oil supply into Cushing, instead of moving in one direction, was getting hit from both sides.
Read More on International Business Times
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
