Gulf Coast oil hub signals a supply glut may be forming

A closely watched slice of the U.S. oil market is sending increasingly clear signals that a supply glut may be forming, Bloomberg writes. 

Physical traders are closely monitoring prices at the Magellan East Houston terminal, where West Texas Intermediate barrels have been trading in contango—a bearish structure that reflects oversupply—for most days since October. 

The Gulf Coast has effectively replaced Cushing, Oklahoma, as the nation’s most important hub for crude storage, refining and exports, making its price signals especially influential. Inventories that once accumulated inland are now concentrated along the coast, where tank farms, export docks and refineries intersect. Signs of strain are also visible offshore, with floating storage near pandemic-era highs as cargoes linger on ships. 

While year-end tax strategies are temporarily drawing down inventories, traders expect Gulf Coast storage to begin filling again in early 2026, reinforcing concerns that a global crude surplus is increasingly landing on U.S. shores. 

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