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Will Crude Oil Prices Outperform in 2H17?

PART:
1 2 3 4 5
Part 4
Will Crude Oil Prices Outperform in 2H17? PART 4 OF 5

Cushing Crude Oil Inventories: Biggest Weekly Fall since January

Cushing crude oil inventories 

A market survey estimates that Cushing crude oil inventories could have fallen on July 7–14, 2017. Cushing crude oil inventories have fallen for the ninth time in ten consecutive weeks. Any fall in Cushing inventories is bullish for crude oil (IXC) (IYE) (USO) prices.

Higher crude oil prices have a positive impact on oil and gas producers’ profitability like Chevron (CVX), QEP Resources (QEP), Sanchez Energy (SN), and Goodrich Petroleum (GDP).

Cushing Crude Oil Inventories: Biggest Weekly Fall since January

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EIA’s crude oil inventory report 

On July 12, 2017, the EIA (U.S. Energy Information Administration) will release its weekly petroleum status report at 10:30 AM EST for the week ending July 14, 2017.

For the week ending July 7, 2017, Cushing inventories fell by 1.94 MMbbls (million barrels) to 57.5 MMbbls—the biggest weekly fall since January 2017. Cushing inventories are at the lowest level since November 2015. Inventories fell 3.3% for the week ending July 7, 2017—compared to the previous week. Inventories fell 10% from the same period in 2016.

Saudi Arabia and US crude oil inventories

US crude oil inventories fell by 7.5 MMbbls to 495.3 MMbbls on June 30–July 7, 2017. For more on US crude oil inventories, read US Crude Oil Inventories: Largest Fall since September 2016.

Saudi Arabia plans to cut its crude oil exports to the US in order to support the production cut deal. Market surveys project that US crude oil imports from Saudi Arabia could fall to 800,000 barrels per day in August 2017.

Impact  

Cushing crude oil inventories have fallen ~18% from the peak. Saudi Arabia’s export plans and the hot summer could drain US and Cushing crude oil inventories, which support crude oil prices.

Next, we’ll analyze US crude oil drilling activity.

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