US Distillate Inventories Fell for the Tenth Time in 14 Weeks
US distillate inventories
The EIA (U.S. Energy Information Administration) reported that US distillate inventories fell by 1.9 MMbbls (million barrels) to 151.6 MMbbls from December 16–23, 2016. US distillate inventories fell for the tenth time in the last 14 weeks. However, US distillate inventories hit six-year seasonal highs of 165 MMbbls for the week ending September 9, 2016.
Diesel futures rose on December 29, 2016, due to the unexpected fall in US distillate inventories. For more on crude oil (IXC) (PXI) (ERY) (FENY) (USL) (USO) (ERX) and diesel prices, read Part 1 and Part 3 of the series. Read Oil Market Focuses on US Crude Oil Inventories and Output Cut for more on crude oil prices.
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Distillate production and demand
US distillate production fell by 165,000 bpd (barrels per day) to 4,957,000 bpd from December 16–23, 2016. US distillate imports fell by 54,000 bpd to 157,000 bpd for the same period. Weekly distillate demand fell by 582,000 bpd to 3,967,000 bpd for the same period.
Impact on stocks and ETFs
US distillate inventories are 1% less than they were in the same period in 2015. Falling distillate inventories could support diesel fuel and crude oil prices.
Higher diesel fuel prices can have a positive impact on US refiners and crude oil producers’ earnings like Cobalt International Energy (CIE), Tesoro (TSO), Bonanza Creek Energy (BCEI), SM Energy (SM), Valero Energy (VLO), Goodrich Petroleum (GDP), and Northern Tier Energy (NTI).
Volatility in crude oil and refined products prices can impact funds such as the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the PowerShares DWA Energy Momentum ETF (PXI), the ProShares Ultra Bloomberg Crude Oil ETF (UCO), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), the First Trust Energy AlphaDEX Fund (FXN), and the United States Gasoline Fund (UGA).
For more on crude oil prices, read What Can Investors Expect in the Crude Oil Market in 2017?, Decoding the World Oil Supply and Demand Gap in 2017, US Election: How Will It Impact the Stock and Energy Markets, Crude Oil Prices Skyrocket as OPEC Agrees to Cut Production, and China’s Crude Oil Imports and Demand Impact Crude Oil Prices.
For more on crude oil price forecasts, read Will Crude Oil Prices Test 3 Digits Again and EIA and Goldman Sachs Upgrade Crude Oil Price Forecasts.
For related analysis, visit Market Realist’s Energy and Power page.