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Crude Oil Has Risen since June: Time to Short Crude Oil Futures?

PART:
1 2 3 4 5 6
Part 5
Crude Oil Has Risen since June: Time to Short Crude Oil Futures? PART 5 OF 6

Cushing Inventories Rose for the Fifth Straight Week

Cushing inventories 

The market expects that Cushing crude oil inventories rose on September 22–29, 2017. Cushing inventories rose for the fifth straight week. Cushing is the largest crude oil storage hub in the US. A rise in Cushing crude oil inventories is negative for crude oil (DBO) (SCO) (USL) prices.

Lower crude oil prices have a negative impact on oil and gas producers’ (OIH) (IYE) (IXC) earnings like Goodrich Petroleum (GDP), Stone Energy (SGY), SM Energy (SM), and Chesapeake Energy (CHK).

Cushing Inventories Rose for the Fifth Straight Week

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EIA’s Cushing inventories 

The EIA (U.S. Energy Information Administration) estimates that Cushing crude oil inventories rose by 1,181,000 barrels to 60.9 MMbbls (million barrels) on September 15–22, 2017. However, Cushing crude oil inventories have fallen by 1.1 MMbbls or 2% from the same period in 2016.

EIA’s US crude oil inventories 

The EIA estimates that US crude oil inventories fell by 1.8 MMbbls to 470.9 MMbbls on September 15–22, 2017. Likewise, the inventories have fallen by 1.1 MMbbls or 0.2% from the same period in 2016. US crude oil inventories are 25% above the five-year average for the week ending September 22, 2017.

Impact  

Cushing inventories have risen by 5 MMbbls or 9.1% in the last ten weeks. Any rise in US and Cushing crude oil inventories could pressure crude oil (USO) (UCO) prices. Lower crude oil prices have a negative impact on oil and gas producers (XLE) (XOP) (IEZ) like Goodrich Petroleum and SM Energy.

In the next part, we’ll analyze how the US crude oil rig count impacts crude oil prices.

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