* Cushing inventories fell to 19 million barrels last week,

below operational lows

* Cushing stocks at the lowest since 2014

* WTI traded as low as $69.63 a barrel on Wednesday

By Arathy Somasekhar

HOUSTON, June 24 (Reuters) - Revived tanker movement through

the Strait of Hormuz pushed U.S. crude prices below $70 a barrel

briefly on Wednesday even though inventories at the country's

crude storage hub in Cushing, Oklahoma have dropped to their

lowest in 12 years.

Stocks of oil at Cushing fell to about 19 million barrels last

week, the lowest level since 2014, the U.S. Energy Information

Administration reported on Wednesday. Still, the price of West

Texas Intermediate, or WTI, the benchmark used to price domestic

crude, traded as low as $69.63 a barrel before settling at

$70.34.

Inventories at Cushing, among the largest storage hubs in the

world, typically reflect supply conditions, and any tightness

would generally push up prices. U.S. crude prices have indeed

risen as high as $119.48 since the U.S.-Israeli war began at the

end of February, but releases from the government's strategic

petroleum reserves have helped limit the price spike.

"Fundamentally we should be higher considering Cushing,

replacing lost barrels, issues that continue with leaving and

entering the Strait (of Hormuz)," said Carl Larry, sales manager

at energy market analytics company Enverus.

"The move lower in prices is more of a continuation of

sentiment sellers. Money that is looking to keep pushing futures

lower in hopes of finding weak support and capitalizing on the

rebound," Larry added.

Strong export demand from the U.S. Gulf Coast and weak flows of

imported crude from Canada due to unplanned production outages

there have depleted volumes stored at Cushing. They now stand

below the 20-million-barrel threshold that traders and analysts

consider the minimum for normal operations.

When oil in a tank at Cushing falls to below 10% or 20% of

capacity, it becomes difficult to remove. It also spurs quality

concerns as water and sediments often settle at the base of

storage tanks.

STRATEGIC PETROLEUM RESERVE

The U.S. government's release of oil from its emergency

reserve has provided a cushion for supplies across the country.

The releases are part of the government's agreement to release

172 million barrels from the facilities to plug a gap in global

supplies and control prices during the Iran war.

The U.S. Gulf Coast looks relatively well supplied thanks to

the strategic petroleum reserve releases and weakening export

fundamentals, analysts at research firm Energy Aspects noted

last week.

Inventories along the Gulf Coast stood at around 239.8 million

barrels at the end of last week, the lowest since mid-February,

before the war began, according to EIA data. U.S. exports eased

to about 4.7 million barrels per day from record highs of 6.4

million bpd touched in April.

The market understands that the marginal barrel is in Gulf

Coast exports and not at Cushing anymore, a senior trader said.

CUSHING'S SIGNIFICANCE ERODES

Lower U.S. crude prices also reflect the waning importance of

Cushing as more oil production heads to the Gulf Coast for

exports.

Shale oil output has surged in the Permian basin in Texas and

New Mexico, the largest U.S. oilfield. Yet much of that oil is

now heading to storage closer to Gulf Coast export ports, or to

refiners in the region, rather than to the flagship Cushing

storage hub.

"It seems not that long ago when supply reports at Cushing

were anticipated with bated breath, today it's one of the least

followed barometers in the energy sector," said James Cordier,

head of investment strategy at investment firm

OptionSpreaders.com.

U.S. exports should ease and more oil should flow towards

Cushing next month, analysts and traders said, noting that more

supply has been unlocked globally as stranded tankers exited the

Strait of Hormuz after the interim peace deal between the U.S.

and Iran.

Stocks at Cushing are estimated to build by around 800,000

barrels next week, according to Energy Aspects.