Per Your Request: Inventories
Key Extract
The Strategic Petroleum Reserve has fallen from 415M to 311M barrels since March and Cushing sits near tank bottoms — while rig counts show producer restraint, not a drilling boom.
Last week we briefly touched on inventories. Now let's highlight the role they play.
In short, if we didn't have inventories like Cushing and the Strategic Petroleum Reserve (SPR), the world economy would literally be in a mess right now.
These inventories act as a buffer against oil shortages, logistic strains, or anything else that prevents crude from getting to the refineries. By the way, when it comes to the SPR, roughly 300MM barrels is the same as zero.
| Reserve | Level |
|---|---|
| Strategic Petroleum Reserve — early Mar 2026 | 415M bbl |
| Strategic Petroleum Reserve — Jul 17, 2026 | 311.4M bbl |
| Cushing, OK (WTI delivery point) | 19M bbl (~25% full) |
Source: EIA Weekly Petroleum Status Report, DOE, Reuters (Jul 2026)
Not great, to put it lightly.
The SPR is there for the military to use in case some kind of war happens on the mainland. Per comments from a few generals, it is never supposed to be used for the purposes of gaming gas prices or political purposes. So ~300MM is the hardline never to be crossed.
Cushing, on the other hand, is used for crude and other refined liquids futures settlement. "Tank bottoms" is what many producers and CEOs are saying now.
This tells you our buffer is dwindling, and not being refilled.
You may be asking, what are the oil producers doing then? Shouldn't they be drilling like crazy given $100+ per barrel? Nope. Producers are much more disciplined this time around. Look at rig count.
| Region | One year ago | Now (Jul 2026) |
|---|---|---|
| US total | 542 | 587 |
| Permian | 263 | 259 |
| Oklahoma (Anadarko) | 42 | 50 |
Source: Baker Hughes rig count, week of Jul 24, 2026
Rigs are what is used to drill for new wells. They barely budged from last year. Producers are determined not to repeat the mistakes of the shale boom circa 2014.
So what does this mean? The supply side is likely not going to improve any time soon. And I'm not holding my breath that the suspended airstrikes on Iran will hold, call me crazy.
All this means is that this cycle around, the elevated price of oil is likely going to stay longer.
Your Oil and Gas team, Mike Qu, on behalf of CrownForge Energy.