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Will US Crude Oil Inventories Overshadow OPEC’s Output Cuts?

PART:
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Part 4
Will US Crude Oil Inventories Overshadow OPEC’s Output Cuts? PART 4 OF 6

Gasoline Inventories Could Fall from All-Time High Levels

API’s gasoline inventories  

The API (American Petroleum Institute) released its weekly inventory report on February 22, 2017. It estimated that US gasoline inventories fell by 0.9 MMbbls (million barrels) from February 10–17, 2017. US distillate inventories fell by 4.2 MMbbls during the same period.

A Wall Street Journal market survey estimates that US gasoline inventories could have fallen by 1.2 MMbbls from February 10–17, 2017. US distillate inventories could have fallen by 0.4 MMbbls during the same period.

Changes in refined product inventories also impact crude oil (FENY) (RYE) (FXN) (PXI) prices. A larger-than-expected fall in gasoline and distillate inventories is bullish for gasoline prices. When gasoline prices rise, they can impact refiners’ crude oil demand, which in turn supports crude oil prices. For more on crude oil prices and its drivers, read Part 1 of this series. 

Gasoline Inventories Could Fall from All-Time High Levels

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Volatility in gasoline and crude oil prices could impact refiners and oil producers’ earnings like Tesoro (TSO), Bonanza Creek Energy (BCEI), Valero (VLO), Denbury Resources (DNR), and Comstock Resources (CRK).

EIA’s gasoline inventories 

On February 23, 2017, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending February 17, 2017.

For the week ending February 10, 2017, the EIA reported that US gasoline inventories rose by 2.8 MMbbls to 259.1 MMbbls—an all-time high level. US distillate inventories fell by 0.7 MMbbls to 170.1 MMbbls for the same period.

Impact 

A larger-than-expected fall in gasoline and distillate inventories could support gasoline and crude oil (DIG) (IEZ) (SCO) prices. However, a rise in inventories could pressure gasoline and crude oil prices.

In the next part of this series, we’ll take a look at gasoline demand. We’ll discuss how it impacts gasoline and crude oil prices.

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