Crude oil is one of the most important sources of energy for the world. Its refined products range from gasoline to asphalt. The applications of these projects range from powering the cars we drive to helping build the roads we drive them on.
So, the price of crude oil is not only important for individual spending on gasoline, but also for the world’s economies and industries. Crude oil prices also directly affect the earnings of major oil producers, like Apache (APA), Occidental Petroleum (OXY), Hess (HES), and ConocoPhillips (COP). All these companies are components of the Energy Select Sector SPDR ETF (XLE) and make up 10% of the ETF.
EIA crude oil inventory data
Crude oil prices are mainly driven by supply-demand trends. Demand is primarily from refineries that process this crude into refined products, like gasoline and heating oil. Supply comes from domestic production and imports from other countries. Inventory levels help to gauge supply-demand trends. Conveniently, the EIA (US Energy Information Administration) reports weekly figures on crude oil inventories every Wednesday. The report also provides data on distillate and gasoline inventories.
Inventories increase when demand is lower than supplies for the week and decrease when demand is higher. Every week analysts anticipate an increase or decrease in crude inventories based on demand and supply expectations in that week.
Inventories last week
Analysts expected an increase of ~4.2 million barrels, or MMbbls, in crude inventories last week. We’ll discuss the actual changes in inventories in the next part of this series.
The difference between actual and expected changes in inventories impacts crude prices. We’ll also cover recent crude price movements in a later part of this series.