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Is US Shale Resurgence a Risk to the Crude Oil Market?

PART:
1 2 3 4 5
Part 2
Is US Shale Resurgence a Risk to the Crude Oil Market? PART 2 OF 5

Record US Crude Oil Inventories: Will the Blood Bath Continue?

Crude oil prices and US stock exchanges 

April WTI (West Texas Intermediate) crude oil (FENY) (IYE) (FXN) futures contracts rose 0.2% and were trading at $48.51 per barrel in electronic trade at 5:05 AM EST on March 14, 2017.

Prices are trading at a three-month low. However, broader markets such as the S&P 500 (SPY) (SPX-INDEX), Dow Jones Industrial Average, and NASDAQ Composite are near all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices. The US is the largest crude oil consumer. For more on crude oil prices, read Part 1 of this series.

Volatility in crude oil prices impacts oil and gas producers’ earnings like Chevron (CVX), Marathon Oil (MRO), Comstock Resources (CRK), and QEP Resources (QEP).

Record US Crude Oil Inventories: Will the Blood Bath Continue?

Record US Crude Oil Inventories: Will the Blood Bath Continue?

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API’s crude oil inventories 

On March 14, 2017, the API (American Petroleum Institute) will release its weekly crude oil inventory report. A Bloomberg survey estimates that US crude oil inventories could have risen by 3 MMbbls from March 3–10, 2017. US crude oil inventories are at an all-time high. A rise in crude oil inventories to a new record could pressure US crude oil (USO) (SCO) (RYE) prices.

EIA’s crude oil inventories 

The API’s report will be followed by the EIA’s (U.S. Energy Information Administration) weekly crude oil inventory report for the week ending March 10, 2017. The report will be released on March 15, 2017, at 10:30 AM EST.

For the week ending March 3, 2017, the EIA reported that US crude oil inventories rose by 8.2 MMbbls (million barrels) to 528.4 MMbbls. Read US Crude Oil Inventories Reach a New All-Time High for more details. The massive rise in US crude oil inventories led to collateral damage of crude oil prices on March 9, 2017.

Impact of US crude oil inventories 

US crude oil inventories have risen by ~50.3 MMbbls, or 10.2%, in the last ten weeks. Crude oil prices fell 6% during this period. Record crude oil inventories could pressure crude oil (UCO) (XES) prices. Record US crude oil inventories and rising US crude oil production are responsible for the delay in rebalancing the crude oil market despite major oil producers’ production cut deal.

In the next part of this series, we’ll look at how OPEC’s crude oil production impacts crude oil prices.

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