What Boosted Gasoline Prices?
EIA’s gasoline stocks
The EIA (U.S. Energy Information Administration) released its weekly crude oil inventory report on March 9, 2016. It reported that gasoline stocks fell by 4.5 MMbbls (million barrels) to 250.5 MMbbls for the week ending March 4, 2016. Market surveys projected that gasoline stocks fell by just 1.4 MMbbls. As a result, gasoline prices hit the January 2016 high on March 9. The massive gasoline drawdown could be due to the Market transitioning from winter-grade to summer-grade motor fuel.
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Gasoline production, imports, and demand
The weekly gasoline production rose by 24,000 bpd (barrels per day) to 9.6 MMbpd (million barrels per day) for the week ending March 4, 2016—compared to the previous week. It’s 4% more than the gasoline production in the same period in 2015. Gasoline imports rose by 0.11 MMbpd to 0.565 MMbpd for the week ending March 4, 2016. The US gasoline imports were at 0.536 MMbpd in the same period in 2015. The gasoline demand rose by 290,000 bpd to 9.4 MMbpd for the week ending March 4, 2016. The US gasoline demand is 11% more than same period in 2015.
Impact of falling gasoline inventories
The uptick in gasoline prices and rising gasoline demand benefits US refiners like PBF Energy (PBF), Marathon Petroleum (MPC), Valero Energy (VLO), and Northern Tier Energy (NTI). In contrast, low crude oil prices impact oil producers like Ultra Petroleum (UPL), Whiting Petroleum (WLL), and PDC Energy (PDCE). For more on US energy companies’ financial woes, read US Oil and Gas Companies’ Debt Exceeds $200 Billion.
ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the iShares U.S. Energy ETF (IYE), the iShares U.S. Oil Equipment & Services ETF (IEZ), the Direxion Daily Energy Bull 3x Shares ETF (ERX), and the VelocityShares 3x Long Crude Oil ETN (UWTI) are influenced by the rise and fall in crude oil prices.