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API Data Signals Another Bloodbath in the Crude Oil Market

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EIA crude oil inventory report

The EIA (U.S. Energy Information Administration) will release the crude oil inventory report today at 10:30 AM EST. The EIA data showed that crude oil inventories increased by 5.3 MMbbls (million barrels) to 489 MMbbls—from 483.6 MMbbls for the week ending April 17, 2015. Yesterday, the API (American Petroleum Institute) reported that the weekly crude stockpile rose by 4.2 MMbbls for the week ending April 24.

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Weekly crude oil inventory consensus

A Reuters and Bloomberg survey published that the US weekly stockpile could increase by 2 MMbbls and 3.3 MMbbls respectively, for the week ending April 24. Industry estimates show a marginal increase in inventory compared to last week’s EIA inventory data. In contrast, API data shows that inventory will double Reuter’s survey.

Bloomberg estimates show that gasoline and distillates will see a massive increase in inventories. Last week, API data showed that weekly crude oil inventories increased by 5.5 MMbbls. The EIA report showed that oil inventories increased by 5.3 MMbbls. If this happens again, we could see carnage in the oil market as inventories increase for the 16th week in a row. The current inventories are 23% more than the inventory levels last year.

Soaring inventories and peak production from Saudi Arabia and Russia will impact crude oil prices in the near term. However, slowing US output and Middle East tensions could support oil prices. The US dollar also fell to eight-week lows. The depreciating dollar supports crude oil prices.

The fall in oil prices impacts oil producers like Comstock Resources (CRK), California Resources (CRC), and SM Energy (SM). They account for 4.2% of the SPDR Oil and Gas ETF (XOP). XOP and the Energy Select Sector SPDR ETF (XLE) followed the crude oil price movement and gained in yesterday’s trade.

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