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Crude Oil Futures Are near a 2-Month High

PART:
1 2 3 4 5
Part 4
Crude Oil Futures Are near a 2-Month High PART 4 OF 5

US Gasoline Inventories Are below the 5-Year Range

US gasoline inventories 

The EIA (U.S. Energy Information Administration) estimates that US gasoline inventories fell by 1 MMbbls (million barrels) to 230.2 MMbbls on July 14–21, 2017. Inventories fell for the sixth straight week. Inventories fell 0.4% week-over-week and 4.6% YoY (year-over-year).

A market survey estimated that US gasoline inventories would have fallen by 0.6 MMbbls on July 14–21, 2017. A better-than-expected fall in gasoline inventories supported gasoline futures on July 26, 2017. Prices rose 1.3% to $1.61 per gallon on July 26, 2017. Gasoline and crude oil (FENY) (SCO) (PXI) prices moved in the same direction on July 26, 2017.

Higher gasoline prices have a positive impact on refiners’ earnings like Western Refining (WNR), Marathon Petroleum (MPC), and Phillips 66 (PSX). Likewise, higher crude oil prices have a positive impact on oil producers’ earnings such as Bonanza Creek Energy (BCEI), Carrizo Oil & Gas (CRZO), and Hess (HES).

US Gasoline Inventories Are below the 5-Year Range

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US gasoline production, imports, and demand 

US gasoline production rose by 297,000 bpd (barrels per day) to 10.39 MMbpd (million barrels per day) on July 14–21, 2017. Production rose 2.9% week-over-week and by 325,000 bpd or 3.2% YoY.

US gasoline imports rose by 132,000 bpd to 723,000 bpd on July 14–21, 2017. Imports rose 22.3% week-over-week but fell by 146,000 bpd or 16.8% YoY.

US gasoline demand rose by 229,000 bpd to 9.8 MMbpd on July 14–21, 2017. Demand rose 2.4% week-over-week and by 24,000 bpd or 0.2% YoY.

Impact of gasoline inventories  

US gasoline inventories are below the five-year range. Inventories have fallen by ~12.2 MMbbls, or ~5%, in the last six weeks. Gasoline inventories are expected to fall this summer due to record gasoline demand. It would support gasoline and crude oil (IXC) (IYE) prices.

In the next part of this series, we’ll analyze US distillate inventories.

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