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New York — HollyFrontier expects crude oil storage tanks in Cushing, Oklahoma, to reach capacity in eight to 10 weeks as flows into the oil hub are set increase by about 4-6 million barrels/week, a company executive said Wednesday.

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In the week that ended February 20, flows into Cushing storage totaled 2.4 million barrels, according to Energy Information Administration data released Wednesday.

Speaking during the company's fourth-quarter 2014 earnings webcast, CEO Mike Jennings said there is a rush to fill up storage tanks in Cushing as a result of the contango market structure and a heavier-than-normal refinery turnaround season.

The NYMEX April crude futures contract ended Wednesday's session $1.71 stronger at $50.99/b while NYMEX May crude futures settled $1.93 higher at $52.76/b and June futures closed at $54.31/b, up $1.97.

"We believe new inbound pipeline capacity, current storage economics and upcoming refinery maintenance activity should continue to drive Cushing inventories higher and spreads wider throughout 2015," the company said in a statement.

Jennings noted that after reaching parity in early 2015, the inland/coastal crude differential widened to more than $9.00/barrel.

On Tuesday, the spread was $9.89/b, according to Platts data.

The Oklahoma oil hub is the delivery point for the NYMEX crude futures contract and home to just under 85 million barrels of crude storage.

According to EIA data, there were 48.7 million barrels in storage at the terminal as of February 20, up from 46.3 million barrels stored there in the week earlier.

HollyFrontier has an unspecified amount of crude storage at Cushing. Jennings said the company has some vacant space, but declined to say how much, adding it has some "to play contango with."

"The question is how much inventory do we want to carry," said Jennings, adding the company has not increased its inventory levels recently.

Jennings said there is a lot of Western Canadian Select crude "being stored by contango plays," but gave no specific volumes.

"There is a lot of WCS going from the Cushing market to the Gulf Coast compared with Maya," he said.

Platts data on Wednesday showed WCS ex-Cushing was trading at WTI minus $6.85/b with a coking netback margin of $14/b while Maya was priced at about a $5.00/b discount with a coking netback margin of $13.69/b.

--Janet McGurty,
--Edited by Keiron Greenhalgh,