Why Did US Crude Oil Inventories Rise More than Expected?
US refinery crude oil demand
The EIA (U.S. Energy Information Administration) reported that US refinery crude oil demand rose by 309,000 bpd (barrels per day) to 16,126,000 bpd from November 4–11, 2016. The US refinery demand rose 2% week-over-week and 0.2% YoY (year-over-year). US refineries operated at 89.2% of their operable capacity in the week ending November 11, 2016.
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US crude oil imports
US crude oil imports rose by 981,000 bpd to 8,423,000 bpd from November 4–11, 2016. Imports rose 13.2% week-over-week and 21% YoY.
The rise in US crude oil imports would have mainly contributed to the rise in US crude oil inventories from November 4–11, 2016. However, the fall in US crude oil production and rise in US refinery demand would have limited the rise in US crude oil inventories for the same period.
A fall in exports could have contributed to the rise in inventories. For more on US crude oil inventories, read Part 3 of this series. Read Are US Crude Oil Exports Game Changers for the Crude Oil Market? for more on US crude oil exports.
US crude oil production estimates
The EIA (U.S. Energy Information Administration) estimates that US crude oil production will average 8.8 MMbpd in 2016 and 8.7 MMbpd in 2017. The expectation of booming US crude oil production in 2017 after Donald Trump’s surprise victory could pressure US crude oil prices. US crude oil production averaged 9.4 MMbpd in 2015. For more on crude oil prices, please read Part 1 of this series.
Lower crude oil prices could have a negative impact on oil producers’ earnings like Carrizo Oil & Gas (CRZO), Apache (APA), QEP Resources (QEP), Chesapeake Energy (CHK), and Continental Resources (CLR).
The ups and downs ride in crude oil prices impact funds such as the VelocityShares 3x Long Crude Oil ETN (UWTI), the VelocityShares 3x Inverse Crude Oil ETN (DWTI), the Direxion Daily Energy Bull 3x Shares ETF (ERX), the iShares U.S. Energy ETF (IYE), the Vanguard Energy ETF (VDE), the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Fidelity MSCI Energy (FENY), and the PowerShares DWA Energy Momentum ETF (PXI).
In the next part of this series, we’ll take a look at gasoline prices.