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Will OPEC Meeting Overshadow Excess US Crude Oil Supply?

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Part 5
Will OPEC Meeting Overshadow Excess US Crude Oil Supply? PART 5 OF 6

US Gasoline Inventories Fell for 4th Time in 5 Weeks

US gasoline inventories 

The EIA (U.S. Energy Information Administration) estimates that US gasoline inventories fell 2.1 MMbbls (million barrels), or 1%, to 216.1 MMbbls between September 8, 2017, and September 15, 2017. Inventories are down 8.9 MMbbls, or 4%, from the same period in 2016. US gasoline inventories fell for the fourth time in five weeks.

A market survey estimated that US gasoline inventories would fall by 2.1 MMbbls between September 8, 2017, and September 15, 2017. US gasoline (UGA) futures were flat at $1.65 per gallon on September 20, 2017, despite the fall in gasoline inventories. However, inventories supported US crude oil (UWT) (SCO) (DBO) prices on Wednesday, September 20, 2017.

US Gasoline Inventories Fell for 4th Time in 5 Weeks

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US crude oil (DTO) (USO) prices are near their four-month highs. Higher crude oil prices benefit oil and gas producers (XLE) (XOP) (IEZ) such as Matador Resources (MTDR), Comstock Resources (CRK), and Continental Resources (CLR).

US gasoline production, imports, and demand  

The EIA estimated that US gasoline production would fall by 95,000 bpd (barrels per day), or 1%, to 9.8 MMbpd (million barrels per day) between September 8, 2017, and September 15, 2017. Production fell to 290,000 bpd, or 2.8%, during the same period in 2016.

US gasoline imports rose by 131,000 bpd to 687,000 bpd between September 8 and September 15, 2017. Imports had risen 118,000 bpd, or 21%, from the same period in 2016.

However, US gasoline demand fell by 178,000 bpd, or 1.8%, to 9.4 MMbpd between September 8, 2017, and September 15, 2017. Demand fell 209,000 bpd, or 2.1%, from the same period in 2016.

Impact of gasoline inventories 

In February 2017, US gasoline inventories were 8.3% higher than the five-year average. For the week ending September 15, 2017, inventories were just 1.5% higher than the five-year average, which suggests inventories are rebalancing towards the historical averages.

US gasoline inventories are down 26.2 MMbbls, or 10.8%, in the last 15 weeks. A fall in gasoline inventories could benefit not just gasoline (UGA) prices, but also crude oil (USO) (UCO) prices.

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

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