Price Of Oil Up Almost $2.00 Today; Weaking Dollar Or Completion Of Southern Leg Of Keystone XL

A reader just sent me this interesting story as reported by Reuters:

The construction of the southern leg of the Keystone XL crude oil pipeline is expected to be completed by the end of October, Corp executive Les Cherwenuk said on Wednesday, according to Bloomberg News.

The 700,000 barrel per day pipeline will carry crude oil from Cushing, Oklahoma, delivery point of the U.S. crude oil future contract, to the Gulf Coast. Cherwenuk said the company would start filling the line shortly after construction is completed, the Bloomberg report said.

If I understand this correctly, about 35 million bbls of crude oil is currently stored at Cushing, OK. 

The initial fill for the Keystone XL pipeline that runs south from Cushing to the Gulf Coast will be about 5 million bbls, and then after that about 5 million bbls/week from Cushing to the coast (700,000 bbls x 7 days = 4.9 million bbls).

Until we get used to those new numbers, it might surprise us to see a sudden drop in storage at Cushing. Sudden drops in storage generally move the oil market. But, again, this is way beyond my comfort level and I could be interpreting things incorrectly.

But it is interesting that the price of oil is up almost $2.00 today, which I originally thought was due to the weakening dollar.