Massive Draw in US Crude Oil Inventories: Just the Beginning?

The API (American Petroleum Institute) released its weekly crude oil inventory report on May 31, 2017. It released data on Wednesday due to the Memorial Day holiday on May 29, 2017. The API data are usually released every Tuesday.

The API estimated that US crude oil inventories fell by 8.67 MMbbls (million barrels) on May 19–26, 2017. US crude oil inventories also fell by 19.77 MMbbls in the last five weeks. The massive draw in US crude oil inventories supported US crude oil (BNO) (PXI) (FENY) prices in post-settlement trade on May 31, 2017. However, prices are trading near a three-week low.

Lower crude oil prices have a negative impact on oil and gas producers’ earnings like Hess (HES), Warren Resources (WRES), and QEP Resources (QEP).

The API added that inventories at Cushing fell by 0.7 MMbbls on May 19–26, 2017. Falling inventories at Cushing also supported oil prices. For more on crude oil prices and drivers, read Part 1 and Part 2 of this series.

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report on June 1, 2017. For details about the previous report, read US Crude Oil Inventories Fell for the Seventh Consecutive Week. Read Analyzing Saudi Arabia’s Crude Oil Export Plans and Are OECD and US Crude Oil Inventories Seeing a Change in Momentum? to learn more.

A market survey estimates that US crude oil inventories would have fallen by 2.8 MMbbls on May 19–May 26, 2017. If the EIA reports a massive build like the API, it could push crude oil prices higher.

In the next part of this series, we’ll analyze gasoline inventories and demand. We’ll see how inventories and demand impact oil prices.