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Will US Crude Oil Bears Overshadow the Bulls?

PART:
1 2 3 4 5
Part 3
Will US Crude Oil Bears Overshadow the Bulls? PART 3 OF 5

Gasoline Inventories Could Pressure Crude Oil Prices

API’s gasoline inventories  

On October 3, 2017, the API (American Petroleum Institute) released the weekly crude oil and gasoline inventory report. It estimates that US gasoline inventories rose by 4.19 MMbbls (million barrels) compared to the market’s expectation of a rise by 1.08 MMbbls on September 22–29, 2017.

US gasoline (UGA) futures fell 1.1% to $1.54 per gallon in electronic trade at 2:25 AM on October 4, 2017. US crude oil (USO) (UWT) and gasoline futures fell due to the larger-than-expected build in gasoline inventories.

Gasoline Inventories Could Pressure Crude Oil Prices

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Moves in gasoline prices impact US refining companies (CRAK) like Holly Frontier (HFC), PBF Energy (PBF), and Marathon Petroleum (MPC). Likewise, moves in crude oil prices impact oil and gas producers (IXC) (IYE) like W&T Offshore (WTI) and Contango Oil & Gas (MCF).

API’s distillate inventories 

The API added that US distillate inventories fell by 0.58 MMbbls on September 22–29, 2017. The market expected a draw in US distillate inventories by 1.8 MMbbls during this period.

EIA’s crude oil and gasoline inventory report 

The EIA (U.S. Energy Information Administration) will release its weekly crude oil and gasoline inventory report on October 4, 2017, at 10:30 AM EST.

If the EIA reports a larger-than-expected rise in US gasoline inventories like the API did, it would pressure crude oil (UCO) (USL) prices. However, a fall in distillate inventories could support diesel prices. As a result, it might support crude oil prices as well.

In the next part of this series, we’ll discuss how gasoline demand impacts crude oil prices.

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