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Crude Oil Prices Could Test $40 per Barrel

PART:
1 2 3 4 5
Part 4
Crude Oil Prices Could Test $40 per Barrel PART 4 OF 5

Will Gasoline Inventories Support Crude Oil Prices?

API’s gasoline inventories 

The API (American Petroleum Institute) released its weekly inventory report on March 21, 2017. It estimated that US gasoline inventories fell by 4.9 MMbbls (million barrels) from March 10–17, 2017. US distillate inventories fell by 0.8 MMbbls during the same period.

A market survey estimates that US gasoline inventories could have fallen by 2 MMbbls from March 10–17, 2017. US distillate inventories could have fallen by 1.4 MMbbls during the same period.

Changes in refined product inventories also impact crude oil (IEZ) (PXI) (BNO) 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 and Part 2 of this series.

Will Gasoline Inventories Support Crude Oil Prices?

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The rollercoaster ride in gasoline and crude oil prices could impact refiners and oil producers’ earnings like Tesoro (TSO), Comstock Resources (CRK), Valero (VLO), Phillips 66 (PSX), and Northern Oil & Gas (NOG).

EIA’s gasoline inventories 

On March 22, 2017, the EIA (U.S. Energy Information Administration) will release its crude oil inventory report for the week ending March 17, 2017.

For the week ending March 10, 2017, the EIA reported that US gasoline inventories fell by 3.1 MMbbls to 246.3 MMbbls. US distillate inventories also fell by 4.2 MMbbls to 157.3 MMbbls.

Impact  

A larger-than-expected fall in gasoline and distillate inventories could support gasoline and crude oil (XES) (VDE) (ERY) 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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