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Will the API Inventory Report Lead the Crude Oil Price Drop?

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Dec. 4 2020, Updated 10:52 a.m. ET

EIA stockpile data

The EIA (U.S. Energy Information Administration) is scheduled to release the weekly stockpile report at 11 AM on Thursday, May 28, 2015. The EIA report showed that crude oil inventories declined by 2.67 MMbbls (million barrels) to 482.2 MMbbls for the week ending May 15. Bloomberg and Reuters’ estimates show that the crude oil stockpile declined by 2 MMbbls for the same period.

In contrast, the API (American Petroleum Institute) data showed that the weekly stockpile rose by 1.3 MMbbls for the week ending May 22. If the EIA stockpile report follows the API’s stockpile data, then crude oil prices could decline. The rising inventory in the oversupply market indicates slowing demand. This would put pressure on crude oil prices.

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Bloomberg consensus shows that refinery utilization might increase by 0.3% to 92.7% for the week ending May 22. Over the same period, the gasoline stockpile fell by 1.65 MMbbls to 222.3 MMbbls. The distillate stockpile also fell by 700,000 barrels to 127 MMbbls. Inventories at Cushing, Oklahoma—the delivery point for US crude oil futures—are expected to decline by 72,000 barrels for the week ending May 22.

Inventories at record highs as well as massive production from OPEC (Organization of the Petroleum Exporting Countries) and Russia will add to the oil glut.

US output dropped by 112,000 bpd (barrels per day) to 9.262 MMbpd (million barrels per day) for the week ending May 15. Rising refinery utilization and declining US output will support crude oil prices. This is positive for crude oil prices.

Oil and gas production and exploration companies like EOG Resources (EOG), ExxonMobil (XOM), and Chevron (CVX) are impacted by declining oil prices. Together, these stocks account for 31.74% of the Energy Select Sector SPDR Fund (XLE). They have an oil production mix that’s more than 50% of their total production.

In yesterday’s trade, oil and gas ETFs like XLE dropped in line with WTI crude oil prices. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) gained against WTI’s price direction.

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