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Crude Oil Futures: Will the Recovery Be Short-Lived?

PART:
1 2 3 4 5 6 7
Part 2
Crude Oil Futures: Will the Recovery Be Short-Lived? PART 2 OF 7

US Crude Oil Inventories Fell: Bullish for Crude Oil Prices?

Crude oil prices  

April West Texas Intermediate crude oil (FENY) (RYE) (ERX) futures contracts rose 1.1% to $49.3 per barrel in electronic trading at 4:55 AM EST on March 16, 2017. Prices rose due to short covering after hitting a three-month low on March 14, 2017.

Meanwhile, broader markets like the S&P 500 (SPY) and NASDAQ are near all-time highs. Bullish momentum in the US stock market could support oil demand and oil prices. The US is the largest oil consumer.

Volatility in crude oil prices impacts oil and gas producers’ earnings like Noble Energy (NBL), QEP Resources (QEP), Denbury Resources (DNR), and Continental Resources (CLR). For more on crude oil prices and drivers, read Part 1 of this series.

US Crude Oil Inventories Fell: Bullish for Crude Oil Prices?

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EIA’s crude oil inventories  

The EIA (U.S. Energy Information Administration) reported that US crude oil inventories fell by 0.2 MMbbls (million barrels) to 528.2 MMbbls from March 3–10, 2017. US crude oil inventories fell 0.1% week-over-week, but rose 7.3% year-over-year.

A market survey estimated that US crude oil inventories would have risen by 3.7 MMbbls from March 3–10, 2017. A surprise draw in US crude oil inventories supported crude oil (PXI) (USL) (IEZ) futures on March 15, 2017. For more on crude oil prices, read Part 1 in this series. In Part 4, we’ll see why US crude oil inventories rose.

Impact of US crude oil inventories 

Meanwhile, US crude oil inventories hit a new all-time high of 528.2 MMbbls for the week ending March 3, 2017. US crude oil inventories are above their five-year range. US crude oil inventories have risen by ~50 MMbbls, or 9.1%, in the last 11 weeks. Crude oil prices fell ~10% during this period. Near-record crude oil inventories would pressure crude oil (XOP) (IXC) prices. US crude oil inventories are the second-biggest bearish catalyst for crude oil prices after US crude oil production.

In the next part of this series, we’ll take a look at US crude oil production.

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