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Will US Crude Oil Production Offset Major Oil Producers' Deal?

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Part 2
Will US Crude Oil Production Offset Major Oil Producers' Deal? PART 2 OF 7

US Crude Oil Inventories Slip from All-Time High

Crude oil prices

West Texas Intermediate crude oil (XES) (BNO) (FENY) futures contracts for May delivery fell 0.1% to $53.1 per barrel in electronic trading at 5:00 AM EST on April 13, 2017. Prices fell due to oversupply concerns. However, prices are near a six-week high. Likewise, broader markets like the S&P 500 (SPY) and the 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 affects the earnings of oil and gas producers like ExxonMobil (XOM), Chevron (CVX), Sanchez Energy (SN), and Denbury Resources (DNR). For more on crude oil prices and drivers, read part one of this series.

US Crude Oil Inventories Slip from All-Time High

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EIA’s crude oil inventories  

The EIA (U.S. Energy Information Administration) reported that US crude oil inventories fell by 2.1 MMbbls (million barrels) to 533.4 MMbbls between March 31, 2017, and April 7, 2017. US crude oil inventories fell 0.4% week-over-week but rose 5.6% year-over-year.

A Bloomberg survey estimated that US crude oil inventories would fall by 1.5 MMbbls between March 31, 2017, and April 7, 2017. Crude oil (XES) (RYE) (VDE) futures fell despite the decline in US crude oil inventories on April 12, 2017. For more on crude oil prices, read part one in this series. In part four, we’ll see why US crude oil inventories fell.

Impact of US crude oil inventories 

US crude oil inventories hit 535.5 MMbbls for the week ending March 31, 2017, the highest level ever. Inventories are 0.4% below their peak level. They’re also above their five-year range. US crude oil inventories have risen by ~54.5 MMbbls, or 10%, in the last 15 weeks. Crude oil prices have risen ~1.3% during this period. Record crude oil inventories could pressure crude oil (IXC) (IEZ) 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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