API and EIA Crude Oil Inventory Data Could Boost Crude Oil Prices
API’s crude oil inventory report
On January 12, 2016, the API (American Petroleum Institute) published its weekly crude oil inventory report. It reported that the US crude oil inventory fell by 3.9 MMbbls (million barrels) for the week ending January 8, 2016. Likewise, the crude oil inventory fell by 5.6 MMbbls for the week ending January 1, 2016. Similarly, Cushing crude oil stocks also fell by 0.30 MMbbls for the week ending January 8.
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EIA’s crude oil inventory report
The EIA (U.S. Energy Information Administration) will release its weekly crude oil, gasoline, and distillate inventory report on January 13, 2016. It reported that the crude oil inventory fell by 5.1 MMbbls to 482.3 MMbbls for the week ending January 1, 2016. If the EIA’s inventory report follows the API’s crude oil inventory data, we could see a rise in crude oil prices. However, market surveys from Reuters suggest that the US crude oil inventory could have risen by 2.5 MMbbls for the week ending January 8, 2016. In the next part of this series, we’ll discuss gasoline and distillate data. We’ll see how the data could influence crude oil prices.
The API’s report added that the US crude oil refinery demand fell by 127,000 bpd (barrels per day) for the week ending January 8, 2016—compared to the previous week. US crude oil imports also fell by 239,000 bpd to 7.2 MMbpd (million barrels per day) for the same period. The fall in US crude oil imports might have led to the fall in the US crude oil inventory.
The US crude oil inventory is 26% more than last year’s level of 382 MMbbls. The record US crude oil inventory could put pressure on the oversupplied crude oil market. The wider contango market and record inventory would benefit oil tankers like Teekay Tankers (TNK), Frontline (FRO), Nordic American Tankers (NAT), DHT Holdings (DHT), Ardmore Shipping (ASC), and Euronav (EURN). To learn more, read How the Fed Influences Contango Crude Oil Market Traders. In contrast, lower oil prices impact oil producers like Hess (HES) and Marathon Oil (MRO).
The volatility in the energy market impacts ETFs and ETNs like the Vanguard Energy ETF (VDE), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), and the VelocityShares 3x Long Crude Oil ETN (UWTI).